World Bank Supports Angola Cope With Sharp Decline in Crude Oil and Promote Economic Diversification

June 30, 2015

WASHINGTON, June 30, 2015 — The World Bank Board of Executive Directors approved today an IBRD financing combining a loan of US$450 million, and an IBRD policy-based guarantee (PBG) of US$200 million to support the implementation of the Government of Angola’s First Fiscal Management Programmatic Development Policy Financing Program (DPF).

This operation represents a stepping up of the World Bank Group’s engagement with Angola at a critical juncture. It is the first IBRD operation since the country’s eligibility to IBRD in 2010. The operation was requested by the Government of Angola in early September 2014, when crude oil price was still in the $90 range, to strengthen a package of macroeconomic and fiscal management reforms which it initiated.

“Given the current global environment, Angola needs to put in place a fiscal policy to be able to continue its efforts to diversify the economy, with greater discretionary expenditures, while protecting the poor and the most vulnerable,” said Clara Ana de Sousa, World Bank Country Manager for Angola and São Tomé and Príncipe.

This first DPF will support the government in the implementation of a set of ongoing reforms needed to mobilize oil and non-oil revenues; strengthen the public investment management systems; and reduce fuel subsidies while implementing social mitigation measures to protect the poor. More precisely, the operation will support the establishment of fiscal rules aimed at increasing the share of the non-oil tax revenues; strengthen the public investment management system by implementing actions aimed at increasing value for money in public investments; and reform the fuel subsidies system and promote social mitigation measures aimed at creating the fiscal space needed for more targeted social transfers, including through the existing Cartão Ki Kuia, among other measures.

“The overarching objective of the 2013-2017 National Development Plan is to ensure macroeconomic stability as the economy diversifies, and this operation fits under this Government objective of economic stabilization to support the country’s structural transformation, with a particular focus on strengthening the country’s fiscal management in the midst of a sharp decline in oil price over the medium term,” said Souleymane Coulibaly, World Bank Lead Economist and team leader for the operation. 

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