“Angola’s public debt is sustainable with a substantial restructuring of interest and principal payments and a strong fiscal adjustment sustained by revenue”, reads the detailed assessment report to the third review of the financial aid program, released today.
After reaching 120% of GDP this year, the debt ratio is expected to fall to reach around 75% in 2025, “going down steadily” and allowing technicians to consider that debt is sustainable, an essential condition for the review may have been discussed by the IMF board of directors.
Unlike other countries with lower ratios and which the IMF considers to have an unsustainable debt, Angola has the particularity of receiving a large part of tax revenues in foreign currency, which, combined with the fact that the majority of the debt is in dollars , mitigates the effect of exchange rate volatility.
“The public debt ratio is expected to remain high over the horizon of projections [até 2025] and it will take a little longer to converge to the medium-term anchor than previously expected ”due to the deterioration of economic conditions, the document reads, which concludes that“ Angola’s debt profile will continue to be subject to significant vulnerabilities, including exposure to foreign exchange risk and interest rates, in addition to a reduction in the creditor base ”.
The IMF board of directors approved on Wednesday Angola’s request for increased financial assistance, immediately disbursing US $ 1 billion and bringing the total program to almost US $ 4.5 billion.
“The decision of the board of directors allows an immediate disbursement of US $ 1 billion [847 milhões de euros] Angola and an increase of about US $ 765 million [648 milhões de euros] until the end of the program ”, to almost $ 4.5 billion (€ 3.83 billion), the IMF then announced.
In the press release accompanying the announcement, the IMF explains that this third positive assessment of the financial assistance given under the Extended Fund Facility, allows for the disbursement of over one billion dollars, amounting to approximately of 2.5 billion dollars (2.13 billion euros) already delivered since the signing of the agreement, on December 7, 2018.
The agreement’s main objectives are “to restore external and fiscal sustainability, improve governance and diversify the economy, to promote sustainable economic growth, led by the private sector”.
MBA // JH