Angola's economy minister told state radio Wednesday that the country would use its just-announced IMF loans to boost its foreign reserves and reduce pressure on the national currency. On Tuesday the southern African country reached a preliminary deal with the International Monetary Fund (IMF) for a loan programme worth an estimated 900 million dollars over 27 months.
Angola needs the money after the fall in the price of oil - which supplies 90 percent of its income - caused its international reserves to fall by 30 percent between January and June. This caused a shortage of dollars, used for salaries and most business transactions, leaving bills and wages unpaid. The national currency, the kwanza, is currently selling at 100 to the dollar on the black market, 28 percent above the official bank rate of 78.
In an interview on state radio, Economy Minister Manuel Nunes said: "Our approach has been to see how they (the IMF) can support Angola in financing the balance of payments." Referring to the disparity between the official and parallel kwanza rate, he said: "The solution to this type of situation is to increase the supply of currency in the economy and this increase will cause the current process, the depreciation of the national currency, to be minimised or even eliminated." The IMF deal - Angola's first partnership with the organisation since the end of civil war in 2002, following previously frosty relations - is expected to be cemented in November.