LUANDA (Reuters) – Angola needs to maintain fiscal prudence in the run-up to the 2017 elections, an International Monetary Fund (IMF) team said on Tuesday after a two-week visit to the oil producing country.
Angola’s economy grew fast after a 27-year civil war ended in 2002, peaking at growth of 12 percent three years ago, but a sharp drop in oil prices has sapped dollar inflows, dented the kwanza and prompted heavy government borrowing.
Oil output represents 40 percent of Angola’s gross domestic product and more than 95 percent of foreign exchange revenue in sub-Saharan Africa’s third biggest economy.
The IMF team said the outlook for 2016 remained difficult, despite the increase of oil prices in recent weeks.
The global lender also warned that economic activity will likely decelerate further, adding that a modest recovery could be expected in 2017 if shortages of dollars are tackled.
“The significant fiscal effort carried out last year was a very important step to assuage fiscal and public debt sustainability concerns,” Ricardo Velloso, who led the team, said in a statement.
“However, further steps are still needed to reduce vulnerabilities, and maintaining fiscal prudence in the run-up to the 2017 elections will be critical.”
The IMF team arrived in Angola on June 1 to discuss options on how to diversify the economy and reduce the dependence on the oil sector, Angolan authorities have said.
(Writing by Nqobile Dludla; Editing by James Macharia)