The suspension of negotiations with the International Monetary Fund (IMF) for a financial support programme for Angola is negative for the country, warned Moody’s credit rating agency in a statement on Monday.
Rita Babihuga, assistant vice president of Moody’s, wrote that the financial support programme would have helped Angola with regard to its foreign reserves and its difficult fiscal adjustment, a process that has been in place for three years.
In the long run, the programme would still have supported the Angolan government’s efforts to reduce its dependence on oil and to reform the exchange rate system, two factors that would help the balance of payments.
Since 2014 when oil prices began to fall Angola’s tax revenues followed this downward trend, with the budget deficit as a percentage of GDP almost doubling from 25% to 47% between 2013 and 2015.
The inflation rate stood at 29.2% in June, the month in which deposits in the banking system recorded a contraction of 5.87%, while Moody’s predicted that Angola’s GDP this year will post a drop of 6.8%. (macauhub/AO)