Angola’s agreement with IMF expected to lead to price rises

17 January 2019

The agreement signed by Angola with the International Monetary Fund (IMF) makes the country credible as a foreign investment destination, but companies and the population are already expecting price increases, according to the China-Lusophone Brief (CLBrief).

CLBrief, an online news service on China and the Portuguese-speaking countries, reported that under the Extended Credit Facility programme, through which Angola will receive US$3.7 billion, the country will have to adopt a set of recommendations.

These include fiscal consolidation, exchange rate flexibility and a monetary policy focused on reducing inflation, which will inevitably have an impact on prices.

The programme signed with the IMF also includes increasing the number of taxpayers, reducing the level of public spending, eliminating late payments, notably to companies that have been awarded public works contracts, and at the same time improving fiscal transparency.

One of the key points in fiscal terms, CLBrief reported, is the introduction of Value Added Tax (VAT/IVA) and the elimination of Consumer Tax from 1 July 2019 for large taxpayers and in 2023 for the rest of the population.

Both companies and private individuals will also be hit by rising prices as a result of the elimination of energy, transport and fuel subsidies, and the programme signed with the IMF includes measures to support the most disadvantaged sections of the population in order to avoid popular discontent.

The programme signed with the IMF aims to reduce Angola’s public debt from the current 90% of Gross Domestic Product to 65% in 2023, including the debt of the country’s national oil company Sonangol, which is undergoing a restructuring program. (macauhub)