The government of Angola should create mechanisms to offset budget deficits with the surpluses generated in years when there is an increase in revenue from oil sales, the Deputy Director of the International Monetary Fund (IMF) said Tuesday in Luanda.
“Some steps are being taken, but more can be done,” said Naoyuki Shinohara, at a lecture in Luanda, as part of the official visit of the IMF deputy director to Angola, according to Portuguese news agency Lusa.
As a result of a drop in oil production in the first half of the year – Angola is the second largest producer in sub-Saharan Africa – for this year the IMF estimated a budget deficit of 4 percent of Gross Domestic Product (GDP), for this first time in five years.
Naoyuki Shinohara noted the “importance” of the country having a “macroeconomic framework” and “clear mechanisms” in the medium-term, to use oil revenues, which Angola’s Oil Minister, Armando Manuel, confirmed were 76 percent of the country’s total revenues.
“When the budget posts a surplus I think the revenues should be used to add to sovereign wealth, but when there is a deficit there has to be a way to finance these deficits, using oil revenues as much as possible,” said Naoyuki Shinohara.
Noting that the Angolan government had been borrowing from abroad to cover the budget deficit, the Deputy Director of the IMF said that the use of funds from the Angola Sovereign Fund was one of the suggested ideas.
According to information released by the IMF, which in July sent a mission to Luanda for regular assessment of the Angolan economy, a 14 percent drop in oil revenues between January and May, is the explanation for the difficulties. (macauhub/AO)