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Angola’s Fragile Stabilization

Author

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  • Jose Giancarlo Gasha
  • Mr. Gonzalo C Pastor Campos

Abstract

This paper discusses the nature of Angola's disinflation strategy in recent years, with special emphasis on the most recent efforts by the Angolan authorities to stabilize the economy. Looking to the past, the paper stresses the costs of the disinflation strategy, as measured by the central bank sizable foreign exchange intervention and the increase in Angola's external liabilities that unfolded in the process. The paper also notes that non-oil fiscal deficits have remained very large. Looking to the future, the paper stresses the pressing need to reduce demand pressures stemming from sizable government spending on wages and salaries, goods and services, subsidies, and other current transfers to the economy. The prescribed fiscal consolidation effort is viewed as critical to curtail the non-oil fiscal deficit, reduce inflation expectations on a lasting basis, and avoid further foreign borrowing on commercial terms, including loans collateralized by future oil revenues.

Suggested Citation

  • Jose Giancarlo Gasha & Mr. Gonzalo C Pastor Campos, 2004. "Angola’s Fragile Stabilization," IMF Working Papers 2004/083, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2004/083
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    References listed on IDEAS

    as
    1. Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 2001. "Prospective Deficits and the Asian Currency Crisis," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1155-1197, December.
    2. Enrica Detragiache & A. Javier Hamann, 1999. "Exchange Rate‐Based Stabilization In Western Europe: Greece, Ireland, Italy, And Portugal," Contemporary Economic Policy, Western Economic Association International, vol. 17(3), pages 358-369, July.
    3. Calvo, Guillermo A. & Vegh, Carlos A., 1999. "Inflation stabilization and bop crises in developing countries," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 24, pages 1531-1614, Elsevier.
    4. Guillermo A. Calvo & Frederic S. Mishkin, 2003. "The Mirage of Exchange Rate Regimes for Emerging Market Countries," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 99-118, Fall.
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