Angola’s Post-Financing Assessment Warns of Risks as Oil Revenues Fall

The International Monetary Fund has released its latest Post-Financing Assessment of Angola, highlighting growing risks for the resource-dependent nation as oil revenues decline and external financing conditions tighten. The report, published after an Executive Board review, acknowledges Angola’s progress in stabilizing its economy in recent years but warns that vulnerabilities remain, particularly as global crude prices soften.

Angola, Africa’s second-largest oil producer, has long relied on petroleum exports as its primary source of government revenue and foreign exchange. In 2024, strong oil prices helped the country record one of its fastest growth rates in over a decade, with GDP expanding by more than 4%. However, with crude prices slipping this year and output constrained by aging fields and limited investment, revenues have begun to fall, putting pressure on both the government budget and external accounts.

According to the IMF, the decline in oil receipts threatens to widen fiscal deficits and increase debt burdens, even as the government has made progress in diversifying the economy. Sectors such as agriculture, mining, and telecommunications have seen growth, but not yet at a scale sufficient to offset the downturn in oil. The report also points to heightened risks from global financial markets, where higher interest rates and tighter liquidity make borrowing more expensive for emerging economies like Angola.

The government has responded with a mix of policy measures, including efforts to broaden the tax base, improve public financial management, and attract investment into non-oil industries. Authorities have also continued to build foreign exchange reserves, which now provide a stronger buffer against external shocks than in previous years. The IMF praised these efforts but emphasized that structural reforms must accelerate if Angola is to achieve sustainable, inclusive growth.

Inflation, which has been a recurring challenge for the country, has moderated in recent months, giving the central bank some breathing room. However, any significant depreciation of the kwanza or spike in global food prices could reignite price pressures. For households, the risk of inflation is particularly acute, as many still face high living costs despite recent improvements in employment and incomes.

The IMF assessment also stresses the importance of governance and transparency in public spending, particularly in the management of state-owned enterprises and the oil sector. Continued reforms in these areas are seen as critical to building investor confidence and ensuring that resources are used effectively for development.

Angola’s leadership has acknowledged the challenges and pledged to continue reforms aimed at diversifying the economy and strengthening resilience. For now, though, the country’s fortunes remain tied closely to oil markets, making the path ahead uncertain. As the IMF concluded, Angola’s progress is notable, but without deeper reforms and stronger buffers, its stability could be tested if global conditions worsen further.