ОРЕАНДА-НОВОСТИ. An International Monetary Fund (IMF) team led by Ricardo Velloso visited Luanda from June 1–14, 2016, for discussions on an Extended Fund Facility (EFF) supported program. At the conclusion of the mission, Mr. Velloso issued the following statement:

“The Angolan economy continues to be severely affected by the oil price shock of the last two years. Economic growth slowed to 3 percent in 2015 driven by a sharp slowdown in the non-oil sector. Inflation has accelerated and reached (year-on-year) 29.2 percent in May 2016, reflecting a weaker kwanza that has depreciated over 40 percent against the U.S. dollar since September 2014, higher domestic fuel prices following the removal of fuel subsidies, and loose monetary conditions. The external current account balance has moved into deficit, although international reserves have been protected and remain at relatively comfortable levels.

“The outlook for 2016 remains difficult, despite the increase of oil prices in recent weeks, and economic activity will likely decelerate further. However, a modest recovery could materialize in 2017, if Angola’s terms-of-trade continue to improve and shortages of foreign exchange that have adversely affected non-oil sector production are tackled.

“Adjusting economic policies is required to facilitate the needed transition of the economy to the ‘new normal’ in the international oil market. The significant fiscal effort carried out last year was a very important step to assuage fiscal and public debt sustainability concerns. However, further steps are still needed to reduce vulnerabilities, and maintaining fiscal prudence in the run-up to the 2017 elections will be critical. The strategy for rebalancing the foreign exchange market will need to be clearly communicated to market participants and rely on greater exchange rate flexibility supported by tighter monetary conditions to contain inflation. Also, the existing administrative restrictions for access to foreign exchange at the official rate, which are a drag on economic activity and diversification, will need to be phased out gradually.

“The mission met with Vice-President Manuel Vicente, Finance Minister Armando Manuel, National Bank of Angola Governor Valter Filipe da Silva, and other senior officials of the executive branch. The mission also met with members of the Economic and Finance Commission of the National Assembly, and representatives from the financial sector, the non-financial private sector, and the state-owned oil company Sonangol, and the diplomatic community.

“We thank the authorities for the candid and constructive dialogue.”