By Foreign Brief
Today, IMF Managing Director Christine Lagarde will conclude her two-day visit to Angola, where she discussed the three-year implementation of a $3.7 billion loan.
Angola’s oil output levels have declined in recent years, stagnating growth and increasing unemployment upwards of 20%. Since President Joao Lourenco’s election last year, initial reforms that have opened entry into Angolan oil, agriculture and financial markets have led to a mild recovery.
As a part of this restructuring effort, Mr Lourenco looked to the IMF for assistance. The loan under discussion today will be a large help in funding new investment projects in agriculture and oil industries. Additionally, an IMF loan offers legitimacy to Lourenco’s reforms, lowering the cost of borrowing from other private investors.
While no austerity measures are initially required, Angola will need to continue implementing market-based changes, such as strengthened anti-trust laws, to unlock the loan’s three annual instalments.
Expect pushback from within Mr Lourenco’s ruling party, which suffers from deep-rooted corruption. Despite international support, if future reforms are not as successful, domestic opposition could see the loan program derailed.
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