Angola: Second Post-Program Monitoring; Press Release; and Statement by the Executive Director for Angola

KEY ISSUESContext: Angola has returned to a path of solid economic growth, with single-digit inflation, a strong international reserves position, and a stable exchange rate. The authorities have made progress in strengthening some areas of fiscal and monetary policies. However, recurrent domestic arrears and the reconciliation of oil revenue remain as challenges for public financial management.Outlook and risks: Growth is projected to have slowed to 4 percent in 2013, but is expected to increase to 5 percent in 2014 as oil production recovers. The non-oil sector continues to grow strongly, as investments in roads and power bolster growth in construction and manufacturing. The 2013 budget took important steps toward the integration of quasi-fiscal operations, but some slippage has been introduced in the 2014 budget. The weakening of the overall fiscal balance initiated in 2013 is expected to continue in 2014, heightening vulnerability to external shocks. In this context, efforts to reconcile oil revenue data and to ensure a timely and complete transfer of that revenue to the Treasury should continue, together with institutional reforms to address recurrent domestic arrears and persistent weaknesses in public financial management. Angola should take advantage of continued high oil prices to put in place reforms that will lead to higher growth in 2015.Focus: Discussions focused on policy options for further strengthening macroeconomic outcomes and key issues related to Angola's capacity to repay the Fund, including the need for: prudent fiscal policies to support further strengthening of buffers; more timely and predictable oil revenue transfers to the Treasury; public financial management reforms to address the recurrence of domestic arrears; and the implementation of theforeign exchange law for the oil sector.