Body in Angola to gauge impact of oil slump on economy

August 14, 2015 4:49 AM

"The team of the IMF will also collect data and evaluate the economic and financial policies that establish the basis to allow structural transformation," the IMF said in a statement.

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013. REUTERS/Yuri Gripas

International Monetary Fund officials begin a working visit to Angola on Thursday with the oil-producing nation's economy reeling from the plunge in international crude prices.

Benchmark Brent is trading below $50 a barrel, close to its 2015 low after an 18 percent drop in July.

The IMF mission, headed by the global lending body's Africa director Ricardo Velloso, will assess Angola's fiscal framework and its ability to manage the impact of falling oil revenues, which account for almost half of Angolan GDP.

It was referring to the need for reform to get away from dependence on oil revenue and manage public finances better. Angola is Africa's second largest exporter of crude and its third biggest economy but suffers from endemic corruption and severe inequality, leaving most of its people in poverty.

An Angolan MP from opposition party UNITA said the financial crunch amounted to an "unprecedented" economic crisis preventing the state from meeting its obligations.

"There is no money for work, for parliamentary missions, there is no money for parliamentary travel, even to pay for breakfast," Adalbert da Costa Junior said.

The finance ministry has made it a priority to build up foreign currency reserves to mitigate oil price volatility. Reserves slipped to $24.9 billion in June from nearly $27 billion in January. Angola relies on oil sales for 95 percent of its foreign exchange revenues.

President Jose Eduardo dos Santos signed multi-billion dollar loan agreements with China in June, angering citizens who accuse a political elite and Beijing of hoarding the spoils of oil revenue among themselves.

According to Reuters estimates, China has lent Angola around $20 billion since its 27-year civil war ended in 2002, with repayments often made with oil or cash directly channelled to Chinese firms operating in the southwest African country.

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