In search of an ‘economic miracle’ Angola taps into the IMF

Angola’s finance ministry said it had requested non-financial assistance from the International Monetary Fund to help it implement economic reforms, as Africa’s second-largest crude producer continues to suffer from a lower oil price.

The agreement, known as a Policy Coordination Instrument, “will help to improve the external credibility of our country with positive impact on the ability to attract Foreign Direct Investment,” the finance ministry said in a statement late on Tuesday.

The ministry said it wanted help in implementing the Macroeconomic Stabilisation Plan, which is effectively the economic policy of the new Angolan government, but did not say what form this should take.

President João Lourenço, who took over last September after 38 years of rule by José Eduardo dos Santos, has said he wants to bring about an economic miracle in Angola by opening up to foreign investment and diversifying away from oil which accounts for over 90 percent of exports.

Lourenço is trying to resolve a dollar liquidity squeeze that has made it difficult for foreign companies to repatriate profits and discouraged many from investing in sub-Saharan Africa’s third-largest economy. On the streets of Luanda, a dollar goes for nearly twice the official rate.

A devaluation of around 30 percent to the dollar this year has gone some way to closing the gap with the street rate.

Angola has been trying to persuade international banks to rekindle dollar correspondent relationships with the country, which were cut over the past few years due to perceived compliance risks in doing business there.