*The Angolan government is implementing reforms to diversify its oil-dependent economy
ABIDJAN, Ivory Coast — The Board of Directors of the African Development Bank Group on Tuesday approved a $165 million loan to finance part of Angola’s three-year economic diversification support program intended to restore the country’s macroeconomic stability.
The Angolan government is implementing reforms to diversify its oil-dependent economy and has adopted measures to improve human and social development to restore fiscal balance after the economy was hit by a global slump in oil prices and repeated droughts.
The program aims to prioritize and promote the production and export of non-oil products and to start to substitute imports through diversification. It forms part of the country’s 2018-2022 national development plan.
There are three main components in the plan; advancing fiscal consolidation through improved public financial management and tax reforms; accelerated implementation of the diversification program; and improving governance in natural resource management and state-owned enterprise reform.
Abdoulaye Coulibaly, African Development Bank director at the governance and public financial management department, said the loan will contribute significantly to the government’s stabilization plan and provide a conducive private sector environment.
“For the past two years we have felt that the authorities are quite committed to make changes. Many concrete measures have been taken… We expect that the program will ultimately impact positively on macroeconomic stability, economic diversification and poverty reduction” Coulibaly said, adding that the country was on track to meet its benchmarks for 2019.
The reforms are expected also to improve state-owned enterprises (SOEs) transparency and increase the availability of SOE financial and performance data which will in turn improve corporate governance and enhance the performance of SOEs, reducing the need for subsidies, he added.
In approving the loan, Board members called for the monitoring of Angola’s high public debt levels, estimated at about 90% of GDP, and projected to ease to around 60% by the end of the program period. They praised renewed efforts by the Angolan government to curb public sector corruption and step up good governance which had deteriorated.
A sharp decline in oil prices since 2014 has harmed the economy, and real GDP shrank by 0.2% in 2017 and an estimated 0.7% in 2018 while fiscal revenues declined by more than 50% between 2014 and 2017. Public debt, largely external, increased from 40.7% of GDP in 2014 to an estimated 80.5% in 2018, raising concerns about its sustainability.
The Bank Group has regularly provided diversified support covering agriculture, rural development and environment, health and education, water and sanitation to Angola’s development efforts. To date, the Group has provided eight loans for a total of $122.4 million to the country.