Higher oil prices to help Angola cut debt: IMF

Angola PresidentLourenço succeeded dos Santos as President in September last year. (Image source: James N. Mattis/Flickr)The executive directors of the IMF said higher oil prices should help Angola cut debt and provide the government with cash to make investments in order to reduce its dependence on oil revenues

Angola, a member of OPEC, has struggled to improve its economy due to its dependence on oil, amidst mounting debt, after oil prices began falling in 2014.

Oil represents about a third of the country's GDP and 95 per cent of its exports, according to the World Bank.

The country responded to the oil price shock by cutting spending, while the central bank's defence of the kwanza led to the erosion of foreign currency reserves.

Since Joao Lourenco succeeded José Eduardo dos Santos as Angola's President, he has fired the central bank governor, promised to tackle mounting debt and graft.

Lourenco also dismissed the heads of state oil company Sonangol and the country's sovereign wealth fund, both of whom are children of dos Santos.

The central bank responded by pursuing a more flexible exchange rate and looser trading of the currency.

The lender welcomed these changes and said boosting tax compliance, the introduction of a value-added tax, tightening public spending and better targeting social programmes would help the country transition to a more diversified economy.

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