Angola Delays IMF Tax Commitment

Angola has announced a delay to the introduction of a 14 per cent Value Added Tax (VAT) on goods and services that it committed to as part of a deal with the International Monetary Fund (IMF).

The delay comes as the Government came under pressure from businesses to ensure adequate preparation ahead if its introduction. The tax is will now be introduced at the beginning of October.

Angola’s deal with the IMF was signed last month and commits the country to introducing the tax in order to receive budget support totalling $248 million from the international lender. The delay is expected to result in a $138 million deficit in the budget. All other countries in the South African Development Community (SADC) have already introduced VAT.

Angola’s economy has struggled with over-reliance on oil, making it vulnerable to changes in price. Around 95 per cent of Angola’s exports consist of oil.

Last month the IMF completed its first review under Angola’s extended arrangement and approved a disbursement of $248 million. Speaking on the approval IMF first deputy managing director and acting chair, David Lipton, stated, “The Angolan authorities have demonstrated strong commitment to policies under the Fund-supported program,”

“However, a weakened external environment, notably the heightened volatility in the international price of crude oil, is posing challenges to their reform efforts.”