Abstract
The Angolan economy is at a juncture. The current growth model based on oil wealth is nearly exhausted,and has not delivered inclusive growth and shared prosperity. The challenge for the administration is to restore macroeconomic stability and lay the foundations for a new, more inclusive growth model that can support a young and growing population.Oil and mineral wealth allowed Angola to sustain a long civil conflict and to pay for post-conflict reconstruction, but it will not allow Angola to reach higher stages on the development ladder.Angola faces two broad policy challenges that need to be addressed urgently: The growing internal and external imbalances following the adjustment to lower oil prices pose an immediate challenge of macro stabilization. Prospects of persistently low oil prices and diminishing oil reserves call for a new sustainable and inclusive growth model that promotes economic diversification. The first priority is to restore macroeconomic stability.Restoring macroeconomic balance is essential to providing a foundation for long-term sustainable growth.The second priority calls for a new and more inclusive economic growth model to achieve sustained growth and to further improvements in human development and poverty outcomes.Sustainable inclusive growth and economic diversification require strong institutions and a more conducive environment for greater private sector participation.The new Administration is well aware of these challenges and has started to carry-out much needed adjustment.The objective of these Angola Policy Notes, written from the perspective of the World Bank, are to support the government in its reform agenda. The 15 concise policy notes range from consideration of short-term macro stability to policies in support of economic diversification and long-term inclusive growth. The policy notes reflect the World Bank’s past and current engagement in Angola in several sectors, and provide a short diagnostic of the current situation and present policy options for reforms. Recommendations are assessed according to technical and political feasibility of delivering results within a time horizon of three to five-years.
Highlights
Angola’s exchange rate and monetary policy framework has been on a non-sustainable path
The 15 concise policy notes range from consideration of short-term macro stability to policies in support of economic diversification and long-term inclusive growth
Recommendations are assessed according to technical fesability and expected impact for the short to medium-term
Summary
The Angolan economy is at a juncture. The current growth model based on oil wealth is nearly exhausted, and has not delivered inclusive growth and shared prosperity. The first set of policy notes focuses on five key topics for supporting a sustainable macroeconomic framework that goes beyond short-term macro stabilization: (i) a flexible exchange rate regime and a new monetary policy framework, (ii) fiscal consolidation, (iii) restructuring of state-owned enterprises, (iv) sustainability of public finances, focusing on oil wealth management, and (v) financial sector stability. The institutional and regulatory framework needs to be established or improved: (i) to attract private financiers and operators, and to relieve the budget, (ii) to plan and build resilient, cost-effective infrastructure and enable trade facilitation for national and regional markets, and (iii) to provide access to basic services to support social development. A digital economy in Angola has potential to create jobs, generate economic output, increase export revenue, and support social inclusion It can help drive the use of ICT across sectors, including in healthcare, education, financial services, and public financial management through operational reforms, digital leap-frogging, and innovation. A successful transition toward greater exchange rate flexibility requires a coordinated policy effort on several fronts as establishing a new policy and institutional framework requires substantial capacity-building
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