IMF cuts Angola's 2025 growth forecast to 2.4% on emerging risks
NAIROBI: The International Monetary Fund has cut Angola's preliminary growth outlook for 2025 to 2.4% from an initial 3%, it said after an assessment mission to Luanda, citing lower prices of oil and tightening external financing conditions.
The Southern African oil exporter had to pay $200 million as extra security for a $1 billion loan from JPMorgan during the height of the selloff of risky assets last month, exposing the challenges faced by small, open African economies.
'This downward revision to the outlook also poses risks to fiscal performance,' the Fund said in a statement, adding that the findings will be discussed by its board in July.
The team, was however, reassured by the government's determination to contain emerging risks, and to put in place mitigating measures, it said in a statement late on Tuesday.
The IMF officials were on a mission known as Post Financing Assessment, which is reserved for nations with outstanding credit above their quotas that do not have an IMF-supported programme or a staff-monitored programme.
IMF talks begin today
The Fund sent a separate statement saying its head of Africa department, Abebe Aemro Selassie, had met with Angola's President Joao Lourenco in Luanda, to discuss the situation.
'I emphasised the IMF's readiness to continue supporting Angola's efforts,' the statement quoted Abebe as saying after the meeting.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
2 hours ago
- Express Tribune
IMF rejects wealth tax, chicken duty
Listen to article The International Monetary Fund (IMF) has objected to the government's contentious proposals to impose a capital value tax on moveable assets and to slap a 5% federal excise duty on one-day-old chicks — measures that underscore the business-as-usual approach of the tax machinery. While the IMF did not endorse the tax on moveable assets and one-day-old chicks, it did agree to the imposition of a tax on digital services aimed at raising Rs10 billion in revenue, according to sources in the Federal Board of Revenue (FBR). There is also a budget proposal to increase the tax on dividend income of mutual funds from 15% to 20%. The withholding tax on interest income may also go up from 15% to 20%, according to officials of the FBR. Among the proposals that may be announced on budget day is the withdrawal of income tax exemption for venture capital companies and funds, according to senior FBR officials. The income tax exemption for the cinema business may also be withdrawn. There has so far been no relief in reducing the income tax rates for the highest slab of 35%, and the 10% surcharge on monthly incomes exceeding Rs500,000 may also remain, said FBR sources. However, the IMF has agreed to reduce the income tax rates for the remaining four slabs, providing some relief on monthly incomes below Rs500,000. It has not agreed to increase the income tax exemption threshold to Rs1.2 million but has approved cutting the rate from 5% to 1%. The sources said that the government wanted to reintroduce the wealth tax in the form of a capital value tax on all moveable assets, excluding shares of listed companies. The proposal had also been presented at the level of Prime Minister Shehbaz Sharif, said FBR officials. The proposal to impose tax on moveable assets such as cash and gold was also shared with the IMF, said the officials. However, the IMF did not endorse the proposal on the grounds that the government should tax income instead of taxing wealth. The FBR wanted to target cash balances in banks to raise revenue, according to FBR officials. Through the Finance Act 2022, the government had introduced a 1% CVT on foreign assets worth over Rs100 million owned by resident Pakistanis, but it has been challenged in the courts. The finance ministry and the FBR on Tuesday gave a briefing to PM Sharif about the budget contours, including measures that the IMF has cleared so far, the sources added. Some issues were still outstanding, including the relief for the real estate sector and the capital value tax. President Asif Ali Zardari on Tuesday convened a National Assembly session for June 10, where Finance Minister Muhammad Aurangzeb will deliver his second budget speech. The Economic Survey of Pakistan is expected to be unveiled on June 9, the third day of Eid. The FBR also wanted to introduce a 5% federal excise duty on one-day-old chicks, but the IMF did not support the idea. It pointed out that, on one hand, the FBR claims there are high taxes on food in Pakistan, and on the other hand, it recommends such proposals. Proposals like the tax on one-day-old chicks and moveable assets indicate that the FBR has run out of ideas. The IMF's concern was that taxing one-day-old chicks was not aimed at broadening the tax base; rather, it targeted a specific industry, said the sources. The FBR did not conduct any study before proposing the tax on chicks, which are an essential food item. The measure was rooted in a tax case involving just one company among hundreds, revealing the shallowness of the proposal. Last month, President Zardari issued the Tax Laws Amendment Ordinance, 2025, and one of the reasons was a poultry sector company. The government inserted a new section, 175C, in the Income Tax Ordinance through ad hoc legislation. The sources said that proposals to impose a 5% federal excise duty on all processed foods — including chips and biscuits — were also considered. Effectively, the 5% FED means the sales tax rate will increase to 23%, and after adding further tax and withholding taxes, the overall cost of taxation will jump to 29%. The prime minister was not in favour of doubling the federal excise duty on fertiliser and raised the issue with the IMF at the highest level. However, during last month's talks, the IMF asked the government to fulfil its commitment to increase the tax, said the sources. The sources said there was still a likelihood that the government may double the federal excise duty on fertiliser to 10% and introduce a 5% excise duty on pesticides in the budget. The sources said the prime minister was told that the budget numbers had been locked with the IMF. The FBR's annual target is likely to be Rs14.130 trillion, and the non-tax revenue target is Rs4 trillion. This brings the total tax and non-tax revenue target to Rs17.1 trillion. The federal government has been allowed to allocate Rs1.186 trillion in budget subsidies, including Rs1.036 trillion for the power sector. For IMF programme purposes, the federal development budget may be Rs873 billion, while provincial budgets are estimated at Rs2.1 trillion — about Rs700 billion less than what the four provincial governments indicated in the Annual Plan Coordination Committee meeting. The IMF has allowed all federal and provincial governments to spend Rs22 trillion on current expenditures. The total expenditures by all five governments for IMF programme purposes are estimated at Rs25 trillion for the fiscal year 2025-26.
Business Recorder
4 hours ago
- Business Recorder
The great myth of ‘crowding out'
Each time the conversation turns to Pakistan's credit-to-GDP, a familiar chorus follows: the sovereign is crowding out the private sector. Government borrowing is now over 70 percent of the banking sector liquidity, and is said to be absorbing all available capital, leaving none for entrepreneurs or exporters. Like 'value addition' or 'fiscal space,' crowding out has become an overused and underexamined refrain - repeated so often it now functions as a placeholder for serious thinking. The problem is not that the theory is always wrong. The problem is that it has flattened the debate into a single, self-reinforcing belief: that if the state would simply borrow less, banks would resume lending to the private sector. That assumption has been tested. And it failed. Over the past two decades, the state has repeatedly tried 'setting liquidity aside' for the private sector. The instrument of choice was the refinance scheme: liquidity created by the central bank and supplied to banks at zero or heavily concessional rates. These schemes were ostensibly meant to channel credit to sectors that markets overlooked: SMEs, exporters, housing, renewables. It worked, at least on the surface. Liquidity flowed, spreads narrowed, and targets were met. But none of it changed the basic credit calculus. Because banks still bore hundred percent of the credit risk,they predictably lent to the same credit profiles they always had: large corporates, familiar clients, and borrowers with collateral. Refinance simply made already-bankable clients cheaper to finance. It did not expand access. It did not alter risk appetite. Is it possible that bank's aversion to widening the credit net had little to do with access to liquidity, and more to do with their risk assessment? What refinance did achieve, quietly was monetary expansion. SBP injections inflated the money supply, bypassed budget scrutiny, and masked the true fiscal cost of subsidized lending. These schemes functioned as off-book quasi-fiscal operations, sold as developmental finance. The result: cheap credit for a few, inflation for the rest. Under the conditions of the ongoing IMF program, the façadeis being dismantled. Refinance is being pushed out of SBP and into the finance ministry. Subsidies will now be explicitly budgetedfor, and likely routed through developmental finance institutions such as the EXIM Bank. On paper, this improves transparency. The fiscal cost is now visible and subject to budgetary discipline. The inflationary impulse, while still present, is at least attached to real expenditure trade-offs. But cleaner optics do not guarantee better outcomes. Nothing about the shift from SBP to MoF alters banks' core behavior. Whether liquidity is created at the central bank or subsidized through the budget, the lending decision still rests with the bank, as does the credit risk. And most Pakistani firms still fail that test—not because they lack viability, but because they lack collateral, audited accounts, or institutional familiarity. That is the real constraint. Not liquidity. Not crowding out. Risk. And the data reflects it. Pakistan's private sector credit-to-GDP ratio has remained stuck under 15 percent for more than a decade, even during years such as 2022 when share of refinance climbed up to 20 percent of total private sector lending. In contrast, peer economies in South Asia and the broader middle-income cohort have steadily expanded credit penetration, without relying on artificial liquidity windows. The difference is not funding availability. It is system design. So no, crowding out is not the one-size-fit-all explanation for Pakistan's credit stagnation. The real story is institutional: a refusal to underwrite unfamiliar risk, a regulatory framework that punishes diversification, and a policy discourse that keeps prescribing liquidity for a problem rooted in risk. Until that changes, liquidity will continue to rotate around the same borrowers, even as the rest of the economy remains locked out.
Business Recorder
4 hours ago
- Business Recorder
APTMA demands immediate removal of yarn, fabric from EFS
KARACHI: All Pakistan Textile Mills Association (APTMA) has urged the government to immediately remove yarn and fabric from the Export Facilitation Scheme (EFS), warning that their continued inclusion is jeopardising the domestic textile industry and distorting fair market competition. Addressing a press conference at APTMA House here on Tuesday, Kamran Arshad Chairman APTMA said that inclusion of Yarn and Fabric in the EFS has resulted in unfair market competition as the domestic industry products are paying 18 percent GST, while importers are enjoying tax-free and duty-free regime. He said that Pakistan Cotton Brokers Association (PCBA) and Pakistan Cotton Ginners Association (PCGA) and many other textile associations are supporting APTM's move. APTMA for removing yarn & fabric from ambit of EFS On the occasion, Naveed Ahmed, Chairman of APTMA Southern Zone, Khawaja Muhammad Zubair, Chairman PCBA and Dr Jassu Mal PCGA, Yasin Siddik former chairman APTMA, Asif Inam and others were also present. 'FY25 budget removed sales tax exemption on local inputs under EFS; however, imports are sales tax-free and duty-free. This move is directly hurting the domestic industry', Kamran Arshad He mentioned that some 18 percent sales tax on local inputs is refundable, but refunds are delayed, incomplete, and costly to process, especially disadvantageous to SMEs. Due to this disparity, over 120 spinning mills and 800 ginning factories have already shut down; looms are also closing and loom workers are protesting on streets in Faisalabad. SMEs are specifically disadvantaged as they have fewer channels for import and pay sales taxes at every stage. In addition, only 60 to 70 percent of refunds are issued, while the rest are stuck in manual processing with no progress in the last 4-5 years, he added. 'Due to cheap import of yarn and fabric, exporters strongly prefer imported inputs, resulting in disadvantageous local suppliers.' There is a massive $1.5 billion increase in import of only cotton, yarn and greige cloth compared to export growth of $1.4 billion in FY25. The import of these items rose from $2.19 billion in FY24 to $3.64 billion in FY25, he mentioned. Chairman APTMA said that subjecting local supplies to 18 percent sales tax while bestowing zero rating on imports is an anti-Pakistan policy that is bleeding the economy within. He informed that APTMA has pushed as much as it can for restoration of the EFS to its June 2024 position with sales tax zero-rating on local supplies. 'We have held meetings with the Minister Finance, Chairman and Members FBR, IMF representatives; however, the IMF has not agreed to restoration.' He said a high-level committee was also formed led by Ahsan Iqbal, Minister for Planning Development & Special Initiatives of Pakistan for negotiation with IMF; however, the meeting could not hold. Copyright Business Recorder, 2025
