Once cash-rich Angola, hit by the dip in oil prices, goes before IMF's for aid

Angola said Wednesday it had asked the International Monetary Fund for help after the crash in oil prices ravaged government finances.

The IMF said discussions would begin next week in Washington on what could be a three-year support plan for the government.

“The sharp decline in oil prices since mid-2014 represents a major challenge for oil exporters, especially for those economies that have yet to become more diversified,” the Fund said in a statement.

“The IMF stands ready to help Angola address the economic challenges it is currently facing by supporting a comprehensive policy package to speed up the diversification of the economy, while safeguarding macroeconomic and financial stability.”

Angola has depended on oil production for 95% of its export earnings and more than half of government receipts.

Its current economic difficulties represent a significant deterioration in fortunes. In 2014, it saw net oil export revenue plunge by more than 12% to $24 billion, due to tumbling production and crude prices. Its earnings for 2015 were further down sharply, with Sonangol, the state-owned company that oversees petroleum and natural gas production in Angola, saying it posted income of  $14.38 billion, “lower by about 34 percent against total revenue in 2014.” 

In a statement, the government said it “is aware that the high reliance on the oil sector represents a vulnerability to the public finances and the economy more broadly.”

Angola “will work with the IMF to design and implement policies and structural reforms aimed at improving macroeconomic and financial stability, including through fiscal discipline,” the statement read.

IMF three-year Extended Fund Facility programmes usually offer financial support for government finances while requiring disciplined reforms, which often include spending cuts and stronger tax collection efforts.