Angola Fiscal Performance In-line with 2016 Budget

Despite a challenging macro backdrop and volatility in oil prices, Angola’s fiscal performance has been in-line with the 2016 Budget.

On the macro front, oil production is higher than 2015 levels at 1.77m barrels/day and we an average oil price has been realised as budgeted for. The Government removed diesel price subsidies in January 2016 and are continuously evaluating reducing expenditures related to non-critical projects.

The government continues to make progress on the implementation of fiscal structural reforms aimed at broadening the tax base, diversifying the sources of revenues and improving public spending efficiency; these initiatives were commended by the IMF on its recently concluded two week visit.

From a funding perspective, Angola continues to demonstrate access to diversified sources of international financing. Since the successful execution of its $1.5bn Eurobond in November last year; Angola has raised an incremental of $10bn from a combination of international banks & institutional investors and Export Credit Agencies.

As it relates to liquidity, the BNA continues to maintain a healthy level of Foreign Exchange reserves equivalent to 8 months of import coverage. An International Monetary Fund (IMF) team that visited  Luanda from June 1–14, 2016, for discussions on an Extended Fund Facility (EFF)has supported program.

As noted by the IMF, the dialogue was candid and constructive. Angola fully acknowledges the comments and feedback from the IMF team as it relates to suggested reforms that the government can undertake to safeguard the economy.

The Angola government’s decision to dialogue IMF on an economic program supported by financial assistance has happened in a context where oil prices have reached very low levels, and presenting perspective to reach levels close to USD 20.

In fact, in January 2016, the oil price have reached levels of USD 28 / bbl. The recent changes the international oil market has bringing out some more optimistic outlook for the oil price prospects, taking into account   the recent recovery. This scenario ensures Government to have a greater fiscal equilibrium.

However, the government of Angola remains largely committed to pursuing its structural reform agenda. In light of its recent economic performance and access to sufficient funding, Angola will not be requiring funding from the IMF. Angola will continue its program of technical assistance with the IMF; the next IMF staff visit is expected to proceed as scheduled in Oct’16. Finally, in the coming weeks Angola will be conducting a series of international investor meetings to provide further updates.”

APO