Angola asked for IMF lending in August, after asking for technical assistance only in April and issuing a USD3bn Eurobond in May. Foreign exchange reserves have kept decreasing despite these moves, reaching an uncomfortable level of 4.5 months of imports in July 2018, well below the 8 months level observed in January 2017. The decision to let the exchange rate float in January 2018 has resulted in a -40% depreciation of the kwanza since then. Given the high level of debt (public debt is 76% of GDP and external debt is estimated at 55% of GDP in 2018) and government plans to repay arrears to corporates (about USD5bn), the country definitely needs fresh money. The difficulty to reach the oil output target is broadening the mismatch between plans and final realization, nurturing a sizeable downside risk to our 2018 growth forecast of +2%. The resulting financing gap is intended to be financed by the IMF. If Angolan authorities and the IMF agree on a fiscal consolidation plan, a USD10bn plan is likely (with a possible initial disbursement of 2.5 to 3 billion USD)
