Angola asks for IMF aid as oil prices fall
A country known for its oil exports, Angola has asked the International Monetary Fund (IMF) for financial assistance to improve economic and financial stability.
Following the end of a 27 year civil war in 2002, Angola’s economy has experienced rapid growth, peaking at 12% per year in 2013. However international crude oil prices are now less than half what they reached in the summer of 2014. In countries such as Angola where the oil industry dominates this has hit hard. The country’s economy is heavily dependent on oil, accounting for more than 95% of export earnings, 40% of GDP, and more than 65% of government revenue.
As well as this, the dollar’s value in Angola has reduced as the country’s native currency – the Kwanza – has slid to just 18% to the dollar, resulting in increased government borrowing.
Diversification has also played a factor as the non-oil sector has increased from 40% of the economy to just below 70%. Angola’s finance ministry has said that efforts to diversify the economy would focus on agriculture, fisheries and mining.
Fiscal reforms will be top of Angola’s agenda, which will involve tax reforms and curbing public spending. Discussions will begin next week during the IMF’s spring meetings in Washington. Angola is looking for a three-year aid package. The IMF usually allows a member country to borrow up to 145% of its quota share in the Fund annually, which for Angola would equate to $1.5 billion per year.