The IMF emphasizes the economic growth expected for this year in Angola, highlighting an expectation of a temporary rise in inflation
The International Monetary Fund (IMF) predicts, in its 2023 Final Consultation Report, a temporary increase in inflation throughout this year, with a gradual reduction from 2025 onwards. This international financial institution justifies this forecast by directing its analysis to the removal subsidies and stabilizing the effects of exchange rate depreciation.
Furthermore, the Executive Board highlights the growing contributions that are foreseen from 2025 onwards, signaling a solid recovery after the challenges faced in 2023. The IMF presented its optimistic forecasts for the Angolan economy, highlighting the recovery of economic growth in the final report of the 2023 Article IV consultation. According to the document, recently made available through the IMF’s usual channels, the forecast is for a revitalization in both oil production and the recovery of the non-oil sector.
Article IV of the IMF statutes, which provides for the regular assessment of the economic policy of member states, also highlighting the compatibility of policies with the stability of the international monetary system. According to IMF data, the focus is on improving the primary budget balance, driven by continued fuel subsidy reforms, a planned reduction in Debt Service from 2024 and the continued recovery in economic growth. The IMF emphasizes that the scenario is conducive to maintaining a positive budgetary balance, providing stability and financial sustainability.
The report also identifies potential risks to the near-term outlook. Among the downside risks, concern about a sharper-than-expected drop in global oil prices or domestic oil production stands out. Furthermore, a delay in implementing the fuel subsidy reform is highlighted as a risk factor. On the other hand, the IMF records upward risks that could contribute even more to the Angolan economy. These risks include the possibility of higher than expected oil prices, which could contribute significantly to the country’s economic growth. Thus, the scenario outlined by the IMF highlights not only challenges, but also opportunities that will shape Angola’s economic panorama in the coming years.
BY: Francisca Parente