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Angola: Staff Report for the 2012 Article IV Consultation and Post Program Monitoring

2012; International Monetary Fund; Volume: 12; Issue: 215 Linguagem: Inglês

10.5089/9781475506662.002

2227-8907

International Monetary Fund,

International Development and Aid

Context:Having made considerable progress toward macroeconomic stabilization in the context of the recent SBA, the authorities are seeking to build a more resilient and diversified economy.This will require stepped-up investments in human and physical capital.Oil revenue accounts for some three-quarters of budgetary revenue and is the main driver of reserves accumulation. Growth prospects and risks:Overall growth is projected to accelerate to 6.8 percent in 2012.Oil prices, though declining, remain higher than budgeted and oil production is projected to rebound.There are downside risks if oil prices were to decline further or if the turmoil in Europe deepens.Focus: Discussions centered on a comprehensive medium-term fiscal framework to shield the economy and protect priority spending from volatile oil prices and production, and the unpredictability of oil revenue transfers from the state-owned oil company, Sonangol.Staff and the authorities agreed on the need to continue accumulating international reserves in light of elevated external risks and Angola's continued dependence on oil.Building on existing efforts, discussions also focused on economic and financial policies that would lay the basis for enabling the structural transformation and diversification of the economy. Financial sector:The FSAP noted that Angola's financial system faces vulnerabilities given the risky domestic and external environment in which it operates.This is due to capacity constraints in banking supervision, inadequate bank corporate governance, high dollarization, and liquidity shifts linked to large oil sector transactions.Staff welcomes the initial steps taken by the authorities to address these risks and recommends that banking supervision be enhanced as a matter of priority.