Angola mounting debt burden raises future default risk

Significance

The IMF's willingness to turn a blind eye may enable Angola to retain access to concessional finance over the next 18 months; however, Luanda needs a plan to address deferred principal payments and recapitalise a key escrow account in 2023.

Impacts

• The IMF's latest funding review will unlock USD500mn from the World Bank and USD200mn from the African Development Bank.
• Persistent IMF pressure for greater central bank autonomy will help curb inflation, which recently reached 25%, pending new legislation.
• Domestic banks remain vulnerable to economic shocks amid a lengthy recession, persistent high inflation and continued currency depreciation.