Angola praised for ‘decisive action’ amid pandemic and oil revenue collapse

22 Sep 20

Covid-19 and lower yield from oil exports threatened to derail Angola’s efforts at economic recovery, but the IMF has lauded the government’s efforts to keep reforms on track.

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A truck from Angola's main oil company Sonangol.

A truck from Angola's main oil company Sonangol

The economy is in its fifth year of recession, with 2020 expected to be the worst year for growth in 30 years, as the fund predicts a 4% contraction.

This is largely due to falling oil revenues, with the government expected to take 14% less in 2020 than it did the year before.

Angola is highly dependent on oil, which makes up 95% of its exports and gives the government two-thirds of its revenue.

But under an existing programme of work with the IMF, Angolan authorities have been working to rebalance their public finances away from this dependence.

They took that work further this year, increasing non-oil sources of revenue with a package of measures in July.

These included progressive increases to income tax, the closure of some exemptions, higher excise taxes on luxury car and cigarette imports and reducing VAT refunds.

The government at the same time drastically cut spending, including freezes on public sector hiring, payments for non-priority goods and services such as travel and non-essential capital expenditure on items such as transport equipment and real estate for government offices.

“The Angolan authorities remain committed to sound policies under the IMF-supported programme despite a deteriorated external environment due to the Covid-19 pandemic, including negative impacts on public health, social protection, the budget, and public debt,” said IMF deputy managing director Antoinette Sayeh.

“The authorities have taken swift and decisive action, in response to lower oil exports and revenue, consistent with broad programme objectives.”

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