Angola’s economy stagnated in 2016, with the oil sector growing by 0.8% and the non-oil sector contracting 0.4%, according to the forecasts included in a document from the International Monetary Fund (IMF) on a consultation held in 2016 under Article IV.
The document acknowledges that oil price shock that began in 2014 considerably reduced tax revenues and exports and said that economic stagnation in 2016 was mainly due to the contraction of the non-oil sector, dragged down by industry, construction and services.
“Industrial production, despite the potential for import substitution, was limited by the shortage of imported raw materials due to limited availability of foreign currency,” the document said.
In its assessment the IMF board of directors acknowledged the Angolan government’s efforts to take steps to mitigate the oil shock but noted that it was necessary to adopt additional measures to stabilise macroeconomic conditions, to address more forcefully the country’s dependence on oil and diversify the economy.
The members of the IMF board of directors welcomed the recent steps taken by the central bank to tighten liquidity conditions, but considered it necessary to reinforce the monetary policy framework to better anchor inflation expectations and assist the transition to greater foreign exchange flexibility.
They highlighted the need to preserve the health of the banking sector and expressed support for the authorities’ efforts to strengthen banking supervision and stressed the need to address the effects of the loss of correspondent banking relationships in dollars. (macauhub)