Angola hikes rates after calling off IMF rescue talks

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Angola’s central bank raised its benchmark interest rate by 200 basis points to 16 percent after the government in Africa’s biggest oil producer broke off talks with the IMF over a possible financial rescue package.

The southern African nation has been hit hard by the slump in global crude prices, which has ramped up pressure on its kwanza currency and ignited inflation, the central bank said.

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Speaking separately in Washington, International Monetary Fund (IMF) spokesman Gerry Rice said Luanda had withdrawn its request for assistance, known as Extended Fund Facility (EFF) support.

“Going forward, discussions concerning the possible EFF supported program will no longer feature in the IMF staff engagement with the authorities,” Rice told a news conference.

He provided no further details.

The kwanza has shed more than 40 percent against the dollar over the last two years, fuelling inflation that hit nearly 30 percent in May.

However, dollars are still inaccessible to ordinary Angolans, who are forced to use the black market, where the kwanza trades at as little as 570 to the greenback, a staggering 71 percent discount to its official value.

President Jose Eduardo dos Santos, Angola’s leader of the last 36 years, admitted last month that state oil company Sonangol had not remitted anything to the central government coffers since January.

On Thursday, he went a step further, saying the money flowing in from oil sales was also insufficient for the needs of the central bank.

“For this reason, the increase in the export of other products for us not continue to depend on oil is an urgent task,” he said in a speech broadcast on state media.

 

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