Bloomberg News

Angola Grew 3.4% in 2011 With ‘Prudent’ Policies, IMF Says

January 24, 2012

(Adds IMF comments starting in second paragraph.)

Jan. 24 (Bloomberg) -- The economy of Angola, Africa’s second largest crude producer, grew 3.4 percent last year with “prudent” policies, the International Monetary Fund said in a review of a $1.4 billion loan program.

The Washington-based lender is scheduled to meet in late March to consider releasing the final $130 million tranche of a loan program that began in 2009 after the global economic slump depressed oil income, said Mauro Mecagni, head of the IMF team that visited Luanda, the capital, Jan. 11 to Jan. 20.

Angola’s finances were aided by higher oil prices and its ability to contain the non-oil primary deficit at about 44 percent of non-oil gross domestic product, the IMF said. The government’s target of an inflation rate of less than 12 percent was helped by a “broadly stable” exchange rate, according to the IMF.

“Macroeconomic prospects for 2012 are broadly favorable, with new oil fields coming on stream expected to boost production above 1.8 million barrels per day,” Mecagni said in a statement.

The government’s budget plans should reduce the non-oil fiscal deficit and trim inflation below 10 percent, Mecagni said. Larger foreign reserves will provide a stronger buffer against oil revenue volatility, he said.

Angola had inflation of 11.4 percent in December, down from 15.1 percent in January 2011, according to its National Statistics Institute.

Sonangol

“Quasi-fiscal operations” by Sonangol EP, the state oil company, could “explain a large part” of the $32 billion found missing from state financial records between 2007 and 2010, the lender said. The government said Jan. 20 it would halt Sonangol from acting as a financial agent of the state, except for paying fuel subsidies and some external credit lines for a limited time.

Angola’s 2011 fiscal balance recorded a surplus of 12.5 percent of gross domestic product, up from about 7 percent in 2010, the IMF said. Foreign exchange reserves at the end of 2011 reached the equivalent of 5.3 months of imports and the external current account recorded a surplus equivalent to 7 percent of GDP.

--Editors: Vivek Shankar, Greg Chang

To contact the reporter on this story: Colin McClelland in Toronto at cmcclelland1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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