The International Monetary Fund said its board approved a $1.4 billion standby loan arrangement for Angola to help it cope with the effects of the global recession.
While the program’s immediate goal is to mitigate trade-related shocks, it also includes a reform agenda aimed at medium-term structural issues to foster growth outside of the southern African country’s oil sector, the IMF said in a statement.
The key pillars of the program include reducing the non-oil fiscal deficit significantly in 2010, while still providing adequate resources for social spending and vital infrastructure projects. The loan arrangement provides space for 30% of central government spending to go to social services.
“The authorities are committed to take further steps to improve fiscal management over the medium-term, increase non-oil revenues by reforming the tax system, and de-link the fiscal stance from short-term movements in oil revenues,” IMF Deputy Managing Director Takatoshi Kato said.
“In this regard, their plan to establish a sovereign wealth fund is welcome,” he said.
Pic: IMF logo