Angola: Staff Report for the 2012 Article IV Consultation and First Post Program Monitoring—Informational Annex
Author:
International Monetary Fund
Search for other papers by International Monetary Fund in
Current site
Google Scholar Close
Publication Date:
02 Aug 2012
eISBN:
9781475506662
Language:
English
Keywords:
ISCR; CR; draft report; reconciliation report; report; draft; debt; financial asset; reference rate; External sector statistics; Government finance statistics; Balance of payments statistics; Commercial banks
Download PDF (370.4 KB)

The Angolan government’s efforts to achieve macroeconomic stability to bring inflation and fiscal deficit considerably down are paying off despite high vulnerability to oil revenue shocks. The expected overall growth of up to 7 percent will be contributed to by increased oil production, multiple public investment programs, tax administration reforms, and inflation control. Concentrating on a medium-term fiscal framework, structural transformation and diversification are expected to reinforce the economy. The Executive Board, which welcomed the Stand-By-Arrangement and Financial Sector Assessment Program (FSAP), suggested removing exchange restrictions.

Abstract

The Angolan government’s efforts to achieve macroeconomic stability to bring inflation and fiscal deficit considerably down are paying off despite high vulnerability to oil revenue shocks. The expected overall growth of up to 7 percent will be contributed to by increased oil production, multiple public investment programs, tax administration reforms, and inflation control. Concentrating on a medium-term fiscal framework, structural transformation and diversification are expected to reinforce the economy. The Executive Board, which welcomed the Stand-By-Arrangement and Financial Sector Assessment Program (FSAP), suggested removing exchange restrictions.

I. Fund Relations

(As of May 31, 2012)

I. Membership Status: Joined September 19, 1989; Article XIV

II. General Resources Account:

article image

III. SDR Department:

article image

IV. Outstanding Purchases and Loans:

article image

V. Latest Financial Arrangements:

article image

VI. Projected Payments to Fund (SDR Million; based on existing use of resources and present holdings of SDRs):

article image

VII. Implementation of HIPC Initiative: Not Applicable

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

IX. Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable

X. Safeguards Assessments:1 The first-time safeguards assessment, which was finalized in May 2010, found that the National Bank of Angola (BNA) is subject to annual external audits by a reputable firm and has taken steps to address the audit qualifications. The assessment confirmed, however, weak governance and transparency practices at the BNA, including lack of timely publication of annual financial statements. The assessment also made recommendations to enhance the legal framework and independence of the central bank, and to strengthen the control framework in the reserves management and internal audit areas. Since this assessment, the BNA has adopted measures to enhance governance and accountability, including the production of its financial statements. The 2009 statements were audited and published together with the auditors’ report; the 2010 audit has been completed and the results will be published on the BNA website mid-October 2011. The Board of the BNA has strengthened its internal audit function, and in January 2011, it reconstituted its Audit Board. It also adopted in December 2010 guidelines for the management of international reserves and in May 2011 conducted a first semi-annual internal audit of their implementation. While IMF staff has received the audited financial statements for 2010, the relevant management letter on internal controls issued by the external auditors for that year has not yet been shared with Fund staff. Provision of this information is required under the safeguards policy.

XI. Exchange Arrangements: Angola’s de facto exchange arrangement has been classified as “other managed” since October The Banco Nacional de Angola (BNA) intervenes actively in the foreign exchange market in order to stabilize the exchange rate by selling part of the oil-revenue related foreign exchange in auctions to banks. Auctions were temporarily suspended from April 20 to October 1, 2009 leading to the establishment of a formal peg. Since the resumption of auctions, the kwanza has depreciated. However, the authorities maintain strong control over the exchange rate, which is the main anchor for the monetary policy. The BNA publishes a daily reference rate, which is computed as the transaction-weighted average of the previous day’s rates of successful bids by commercial banks. Banks and exchange bureaus may deal among themselves and with their customers at rates that can be freely negotiated provided they do not exceed the reference rate by more than 4 percent.

Angola continues to avail itself of the transitional arrangements under the provisions of Article XIV, Section 2 and maintains two exchange measures, namely, (i) limits on the availability of foreign exchange for invisible transactions, such as travel, medical, or educational allowances and (ii) limits on unrequited transfers to foreign-based individuals and institutions. In addition, Angola maintains two exchange restrictions resulting from: (i) limits on the remittances of dividends and profits from foreign investments that do not exceed US$1,000,000,2 and (ii) the discriminatory application of the 0.015 percent stamp tax on foreign exchange operations that are subject to approval under Article VIII, Section 2(a). Angola maintains two multiple currency practices (i) arising from the Dutch foreign exchange auction, and (ii) the discriminatory application of the 0.015 stamp tax on foreign exchange operations that are subject to approval under Article VIII, Section 3.

XII. Article IV Consultation: Angola is on the 12-month cycle for program countries. The next Article IV Consultation is scheduled to be completed in mid-2013.

XIII. Technical Assistance: Angola has received technical assistance during the 2009-2012 Stand-By Arrangement. Technical assistance activities since 2008 are listed below:

article image

XIV. Resident Representative: Since January 2011 the IMF has a Resident Representative for Angola (Mr. Nicholas Staines).

II. Joint Imf-World Bank Management Action Plan

Implementation Matrix

article image

III. Statistical Issues

1. Data provision has shortcomings, but is broadly adequate for surveillance and program performance. There are major concerns about data quality and timeliness and efforts are underway to strengthen the statistical base, including through technical assistance from the Fund and the World Bank. The authorities are committed to using the General Data Dissemination System (GDDS) to improve the statistical system. Angola started participating in the GDDS in October 2003 and metadata were posted on the IMF’s Dissemination Standards Bulletin Board. The metadata need to be updated.

Angola now has several regular and informative statistical publications; reflecting significant progress in the provision of data and transparency in statistical reporting since beginning of the SBA. They include the quarterly statistical bulletin of the National Bank of Angola (BNA), the quarterly budget execution reports of the Ministry of Finance, and the quarterly economic outlook of the National Institute of Statistics (INE). INE also published an informative inflation report. Data postings on the government website (www.minfin.gv.ao) including revenues from the oil sector, but are not as timely as recommended in the GDDS. The BNA recently redesigned its website, to make it more accessible and timely.

National accounts and price statistics

2. Official GDP estimates are published annually and generally only by sector, with no disaggregation by industry and the government sector is not identified. Annual GDP at constant prices is estimated using 2002 prices. There are no estimates of GDP by expenditure. A quarterly GDP series is in production, and publication will begin in 2012. Apart from oil production, sectoral data are calculated using indicators with weights based on incomplete surveys conducted in 2001 or earlier. A lack of statistical offices in the provinces significantly limits data coverage. The CPI is based on a basket of goods and services for which prices are collected in Luanda. The geographical coverage of price collection was extended to five more provinces and an unofficial quarterly index has been compiled commencing in 2005, but a September 2006 STA CPI Mission did not regard these data as sufficiently reliable for publication. The CPI weights were revised in January 2002 based on a household survey conducted in 2001. CPI data are produced monthly, normally with a lag of two weeks. There are no wholesale or producer price indices.

Monetary and financial statistics

3. Data for the depository corporation survey and the balance sheet of the central bank are timely but still based on old report forms. There are concerns about the quality and timeliness of reports from some commercial banks. A March 2006 STA mission assisted the BNA in starting compilation of monthly monetary statistics using the new standardized report forms (SRFs). The mission made several recommendations for improving monetary statistics and finalizing the SRFs, including the classification of bank holdings of treasury bills and bonds and central bank bills, and the valuation of foreign currency-denominated accounts. A May 2007 follow-up mission assisted the BNA in finalizing the SRFs for the central bank, but further work is needed to finalize the SRF for the other depository corporations. The mission also focused on the intersectoral consistency of the monetary and the government finance and balance of payments statistics, and provided on-the-job training. Once the link between the SRFs and the new accounting data of the other depository corporations is finalized, the SRFs will be used to derive an integrated monetary database to meet the needs of the BNA, as well as AFR and STA.

Government finance statistics

4. The timeliness and quality of government finance statistics needs to be improved. Budget execution reports reflect liabilities for tax payments as estimated in the budget (budget basis), rather than revenues collected (cash basis); and expenditures reflect only expenditures on a cash basis rather than expenditure on a commitment basis. Data from the SIGFE management information system are still limited in coverage and reliability, and subject to revisions. Monthly government accounts tend to rely on estimates based on the budget rather than on actual execution figures. The MoF does not report a significant number of series for government finance data for publication in the GFS Yearbook or in International Financial Statistics.

External sector statistics

5. The balance of payments and international investment position are compiled in line with the recommendations of the fifth edition of the IMF’s Balance of Payments Manual. These statistics are compiled and disseminated annually, with a lag of nine months after the reference period. A technical assistance mission on external sector statistics was conducted in July 2010. It noted that few of the recommendations made by the previous missions had been implemented and that little progress had been made in strengthening the compilation framework, the technical units are understaffed and there are problems of non-compliance with data reporting requirements by resident enterprises. A thorough review of the balance of payments and IIP for 2008 and 2009 was conducted. The authorities have made progress regarding the methodological soundness of classification of balance of payments transactions. Nonetheless, some inconsistencies have been found, especially regarding the classification of transactions involving arrears and SDRs. The IIP showed important inconsistencies with the balance of payments and the external debt statement. Coverage and timeliness of source data remain a major shortcoming. The development of the BNA’s International Transactions Reporting System (ITRS), known as SIOBE, was halted due both to lack of staff and the uncertainty regarding its replacement by a similar ITRS being developed by the BNA.

6. In addition, the mission also noted that the continued improvement in the quality of statistics depends on: (1) an increase in the rate of response to the surveys, including the adoption of administrative measures to curb noncompliance with reporting requirements; (2) implementation of tools and mechanisms for the organization, analysis and validation of ITRS data; (3) compliance with commitments in the agreements signed with the National Statistics Institute, and the MoF for access to their databases; and (4) integration of more data sources.

IV Angola: Table Of Common Indicators Required For Surveillance

article image

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I), not available (NA).

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

1

For a description of the IMF Safeguards Assessment framework, see http://www.imf.org/external/np/exr/facts/safe.htm.

2

This threshold was recently raised from US$100,000.

Same Series

Other IMF Content

Other Publishers

  • Collapse
  • Expand
Cover IMF Staff Country Reports
Angola: Staff Report for the 2012 Article IV Consultation and Post Program Monitoring
Author:
International Monetary Fund
Volume/Issue:
Volume 2012: Issue 215
Publisher:
International Monetary Fund
ISBN:
9781475506662
ISSN:
1934-7685
Pages:
75
DOI:
https://doi.org/10.5089/9781475506662.002