Angola’s government made several progresses. The floating of the exchange rate was the first necessary reform (-23% depreciation since January). The import cover of FX fell below 5 months in February (from 8 months a year earlier). Angola asked for IMF guidance last week, under a Policy Coordination Instrument (a program without financing). It may allow access to Eurobond markets (a USD2bn bond is planned for May). More structural reforms will be needed to stay on-track with the IMF. SOEs are one tip of the iceberg, since these corporates contributed to a visible debt increase. First reforms of corporate governance have been well received. External debt has become a key problem, having risen to 45% of GDP. The willingness to reschedule is welcome and possible – Mozambique has paved the way, having already reached agreement with its bilateral creditors. It should help Angola’s government to pay about USD5bn of arrears to local corporates. Overall, a likely easing of financing conditions would help growth to accelerate from +0.7% in 2017 to +2% in 2018.
