“Due to the drop in revenues, gross financing needs will be significant in 2020, but are expected to gradually decline to more manageable levels in the medium term”, reads the detailed analysis of the approval of the third review of the IMF financing program a Angola.
“To meet the financing needs that have increased due to covid-19, the recapitalization of banks, the payment of overdue debts and critical investments, [the Government will resort] to exceptional financing from the G20 Debt Service Suspension Initiative , debt restructuring to major creditors, budget support from multilateral organizations, including increasing the IMF loan, privatizations, disbursements of existing credit lines within the program limits, withdrawing government deposits and selling Sovereign Fund financial assets “, list the analysts.
The covid-19 pandemic, coupled with falling oil prices and reduced international demand “generated additional financing needs compared to the second assessment of 3.8 billion dollars this year and 29 billion dollars in 2021” says the IMF.
According to the data presented in the detailed assessment of the third review, Angola needs 12 billion dollars this year and 9 billion dollars in 2021 to balance the budget, a figure that drops to around 7 billion between 2022 and 2024 , increasing to almost 9 billion in 2025.
These high financing needs led Angola to request an increase in the amount of the financial assistance program and a rescheduling of payments for this year, which the IMF accepted.
“After considering the policy adjustment in the supplementary budget, the increase would provide part of the necessary additional financing, with the remainder to be secured through DSSI and debt restructuring,” says the IMF.
In addition, they conclude, “with the expected expansion of the pandemic in Angola, the authorities liked to have space to move forward with the importation of medicines and test material and therefore asked for a rescheduling of payments to the IMF for the rest of this year”
The IMF board of directors approved on Wednesday Angola’s request for increased financial assistance, immediately disbursing 1 billion dollars and bringing the total program to almost 4.5 billion.