IBERSOL Annual Report 2018

The Year of 2018 Situation in Angola Recent IMF figures indicate that in 2018 the Angolan economy withdrew by 1.7% (highlighting the negative trend of the previous year of 0,2% in 2017) a far cry from the 4.9% growth forecast at the beginning of the year, which is mostly due to a strong fall in oil and gas production, which led to a steep devaluation of the Kwanza, and the ensuing rise in prices. Growth is expected to return in 2020 and consolidate on the 3,2% in 2021, with an increase in oil prices and a gradual improvement of other economic sectors, albeit there may still be a decrease in oil production, due to the fall in investment over recent years. TheGovernment of Angolawhich came out of the 2017 elections decided to implement a Macroeconomic Stabilisation Programme for 2017-2018, aimed at strengthening fiscal sustainability, reducing inflation, moving towards a more flexible exchange rate and bolstering the solidity of the financial sector, and began to implement a National Development Plan for 2018-2022, centred on solving structural bottlenecks, reforming the public sector and diversifying the economy. These efforts are supported by the Extended Arrangement signed with the IMF in December 2018, within the scope of the Extended Develop- ment Plan, to the tune of USD 3.7 billion, which will be made available over stages of the programme, dependent on half-yearly evaluations. The Extended Arrangement is an instrument aimed at lessening An- gola’s macroeconomic imbalances and opening a path to sustained development. As is laid out in the Letter of Intent and the Economic and Financial Policies Memorandum, the main goals of the programme are to: i) consolidate fiscal adjustment in 2018, followed by gradual fis- cal consolidation; ii) liberalise the exchange regimen; iii) modernise the monetary policy framework; iv) strengthen the resilience of the financial sector and, v) encourage economic growth and diversification. It is hoped that reforms planned by the Authorities and the cooperation of the IMF will allow Angola to solve its macroeconomic and structural imbalances so as to guarantee sustained medium-term growth. 30