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REPORT TO CONGRESS ON

THE INTERNATIONAL MONETARY FUND’S

LOAN TO ANGOLA AND BARBADOS

A Report to Congress

consistent with

Section 1501 of the

Dodd-Frank Wall Street Reform and Consumer Protection Act, 2010

United States Department of the Treasury

July 30, 2021
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Introduction

This report provides an assessment of the likelihood that the International Monetary Fund (IMF) 

loans to Angola and Barbados will be repaid in full. This report is required by section 1501 of 

the Dodd-Frank Wall Street Reform and Consumer Protection Act, 2010.

1 Both countries 

received loans at a time when the most recent data established that their public debt-to-GDP 

ratios were greater than 100%, and neither country is eligible for assistance from the 

International Development Association.

As directed by section 1501, and consistent with its longstanding practice with respect to all 

loans, the Office of the United States Executive Director (OUSED) at the IMF, in close 

coordination with the Treasury Department, conducted a careful and thorough evaluation of the 

proposed programs for Barbados and Angola when they were submitted to the IMF Executive 

Board. The OUSED and Treasury continue to monitor the progress under the programs.

BARBADOS

Barbados has struggled to break free from a vicious cycle of low or negative growth since the 

2008-09 financial crisis. On October 1, 2018, with public debt at around 160% of GDP, the 

country entered a four-year Extended Fund Facility (EFF) for SDR 208 million (about $290 

million). Since then, Barbados’s public debt declined to 125% at the end of fiscal year 

2019/2020 before rising to 143% due to the COVID-19 pandemic. Meanwhile, international 

reserves have rebounded sharply to $1.3 billion from $220 million at the beginning of the 

program, aided by disbursements from the Inter-American Development Bank and the Caribbean 

Development Bank. In December 2019, Barbados completed a successful external public debt 

restructuring (following its 2018 domestic debt restructuring) to further reduce the stock of 

public debt, lower interest payments, and lengthen maturities to increase Barbados’s repayment 

capacity. Additionally, because of the need for aid amid COVID-19, the United States has 

relaxed its policy of being against multilateral development bank (MDB) financing for Barbados 

that was in place because Barbados is a high-income country. This decision has led MDBs to 

provide significant financing alongside the IMF which has helped with the sudden budget 

shortfall that emerged as a result of the significant drop in tourism amid the pandemic.

1 1P.L. 111-203; codified at 22 U.S.C. 286tt(b), section 68(b) of the Bretton Woods Agreements Act: “Within 30 

days after the Board of Executive Directors of the Fund approves a proposal [to make a loan to a country whose 

public debt exceeds gross domestic product and is not eligible for assistance from the International Development 

Association], and annually thereafter by June 30, for the duration of any program approved under such proposals, 

the Secretary of the Treasury shall report in writing . . . assessing the likelihood that loans made pursuant to such 

proposals will be repaid in full, including—(1) the borrowing country’s current debt status, including,

to the extent possible, its maturity structure, whether it has fixed or floating rates, whether it is indexed, and by 

whom it is held; (2) the borrowing country’s external and internal vulnerabilities that could potentially affect its 

ability to repay; and (3) the borrowing country’s debt management strategy.”
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The main pillars of the EFF include: (i) fiscal adjustment that adopts a primary surplus of 6% of 

GDP in the medium term; (ii) State Owned Enterprise (SOE) reforms to reduce transfers that 

have become a significant burden on the budget; (iii) external debt restructuring with foreign 

commercial creditors; (iv) maintaining the stability of the financial system following the impact 

of domestic debt restructuring; and (v) growth-oriented reforms aimed at supporting both the 

traditional and non-traditional private sector.

Under the current EFF, the country authorities have shown strong ownership of the reform effort 

and program implementation. The rapid completion of a domestic debt restructuring was helpful 

in reducing economic uncertainty and directly reduced the debt-to-GDP ratio. Barbados met all 

performance criteria for end-March 2021 except for the performance criterion on limiting central 

government transfers and grants to public institutions, which was breached due to increased 

spending to address the COVID-19 health crisis. Barbados has also made steady progress on 

structural reforms, successfully meeting four of five structural benchmarks on time, with the fifth 

delayed to end-2021. However, the COVID-19 crisis has necessitated adjusting several of the 

program’s parameters, forcing the government to reduce its primary balance target to a 1% 

primary deficit in fiscal year 2020/2021. Due to the COVID-related shock to Barbados’ external 

and fiscal accounts, the IMF Executive Board approved a $90 million (70% of quota) 

augmentation to the EFF in June 2020.

This program involves significant risks due to the extensive nature of the structural reforms and 

adjustments needed and the government’s limited implementation capacity. Moreover, Barbados 

is vulnerable to a prolonged global downturn in tourism due to COVID-19. However, Barbados

has established a solid repayment history following its two previous IMF programs and has 

shown strong ownership of the current reform effort by following through on numerous policy 

measures since the start of the program, despite shocks from the COVID-19 crisis. Based on its 

strong implementation of the program and commitment despite the pandemic, we expect 

Barbados to repay the IMF in full.

Debt Status

At the time of program approval, Barbados’ public debt had reached an unsustainable 157% of 

GDP. Barbados completed a comprehensive domestic debt restructuring in October 2018 and an 

external debt restructuring in December 2019. Public debt decreased by 26 percentage points of 

GDP – from 158% of GDP in April 2018 to 122% of GDP in March 2020. Since then, public 

debt has rebounded to 143% of GDP, due almost entirely to the 18% contraction in GDP rather 

than a relaxed fiscal stance; the primary fiscal balance registered a 1% of GDP deficit in 2020 but 

is forecast to return to surplus this year. Since April of 2018, public external debt increased by 

24% of GDP (from 28% to 52% of GDP) due to loans from international financial institutions to 

augment Barbados’s foreign exchange reserves and a collapse in nominal GDP. However, 

public external debt is projected to gradually decrease to about 33% of GDP by FY 2026/2027.

The overarching objective and long-term anchor of Barbados’s IMF engagement is to have debt 

be at 60% of GDP, which the IMF estimates Barbados will reach two years later than the original 
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goal of March 2034, due to the COVID-19 pandemic. The IMF extended the deadline for 

Barbados to reach its debt target as the health crisis caused a recession and a commensurate 

deterioration in the fiscal position as the tourism slump weakened revenues and expenditure rose 

on social support and public health. Implementation of structural reforms, improvements in 

public revenue mobilization, and the eventual post-COVID recovery in GDP growth should help 

Barbados meet its target. Treasury has been supportive of the IMF’s pragmatic approach, 

especially in light of Barbados’ strong performance before and during the pandemic.

Debt Management Strategy

After securing a moratorium of payments of external commercial debt, Barbados completed a 

debt restructuring agreement that reduced the stock of its external debt, reduced its interest 

payments, and lengthened its average maturities.

The government’s primary objective is to sharply reduce its debt burden through a 

comprehensive restructuring of its domestic debt and primary fiscal surpluses of 6% of GDP 

over the medium term, once the immediate crisis has passed. The authorities will work toward 

these goals via implementation of its IMF-approved reform program. The program’s design

supports private sector-led investment and growth and restores confidence in the economy. 

SOE reforms will be critical to achieving a structural fiscal surplus. Under the Financial 

Management and Audit law passed in January 2019, the government must approve all SOE 

borrowing and SOEs submit standardized quarterly reports on SOE performance. SOE 

monitoring has been enhanced with the development of a risk dashboard that analyzes the 

financial performance of priority SOEs. This reform will provide oversight of government debts 

and reduce transfers to SOEs, which was reflected in a 1% of GDP drop in transfers to SOEs (to 

6.6% of GDP) prior to the pandemic. However, transfers rose to over 9% of GDP in FY 

2020/2021 to accommodate the government’s COVID-19 policy response through several SOEs, 

including the implementation of the vaccination program by the national hospital, and are 

expected to remain elevated in FY 2021/2022.

Additionally, the Corporate Income Tax reform to unify the treatment of domestic and 

international companies should foster a business-friendly environment in Barbados, stimulating 

the economy and decreasing the debt-to-GDP ratio over the medium term. 

Vulnerabilities

Key risks to the debt reduction strategy include: limited implementation capacity of the 

government; untested ability to maintain fiscal discipline/high surpluses over a sustained period; 

and vulnerability to external shocks, particularly the current COVID-related crisis, as Barbados 

is heavily dependent on tourism for most economic activity. With an improvement in the global 

economic outlook including in key tourism source countries as well as faster-than-expected 

vaccination programs, the IMF predicts that tourist arrivals will start gradually recovering in the 

second half of 2021 and return to normal levels by 2024. GDP contracted by 18% in 2020, but is 
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expected to increase by 3% in 2021, given the modest recovery of tourism in the second half of 

the year.

The authorities have initiatives to diversify the economy into new areas over time such as 

renewable energy, high-tech, and software development to complement the traditional services 

sector, but these nascent industries will take time to develop. SOE reform, a key program 

component, will also include increases in politically sensitive tariffs and fees which may restore 

profitability but foster public discontent. Finally, Barbados remains highly exposed to the risk of 

significant weather-related natural disasters, including continued volcanic activity in neighboring 

Saint Vincent which could have a dampening impact on economic activity in Barbados. 

Overall Assessment

Barbados remains heavily indebted and vulnerable. However, its comprehensive domestic debt 

restructuring was highly successful in reducing the overall debt burden and putting the country 

on a path towards sustainability. The Barbadian authorities continue to demonstrate their strong 

commitment to meeting IMF program objectives, including through strong public 

communications to maintain public support for the reform effort. The EFF also provides a strong 

framework to help enable significant fiscal consolidation and an increase in foreign reserves. 

Notably, Barbados would also receive $129 million worth of SDRs, a reserve asset, as part of a 

potential upcoming $650 billion SDR allocation. Based on these factors and the IMF’s status as a 

preferred creditor, the Treasury Department assesses that the IMF’s loan to Barbados is likely to 

be repaid in full.

ANGOLA

Angola’s public debt, which had previously been at moderate levels for several years, began to 

increase significantly starting around 2012 as the Angolan government undertook extensive new 

external borrowing. In 2018, with public debt at 87% of GDP, Angola entered into a three-year 

Extended Fund Facility with the IMF for SDR 2.7 billion (about $3.7 billion), partially focused 

on improving the quality of the Angolan government’s debt management and sustainability. At 

the time of Angola’s fifth review in June 2021, which resulted in the disbursement of loans as 

part of the program, Angola’s debt to GDP ratio was about 110%.

The key pillars of Angola’s IMF program include: (i) fiscal consolidation to improve debt 

sustainability and reduce the inflationary impact of currency liberalization; (ii) liberalizing 

Angola’s exchange rate to reduce the distortionary impact of the overvalued kwanza; (iii) 

improving financial sector oversight and resilience; and (iv) reforms to strengthen private sector 

growth and reduce fiscal risks of state-owned enterprises.

At the start of its program, the IMF had projected that Angola’s public debt would decline to 

72% of GDP by the time of program completion in 2021. Instead, debt increased due to the 

COVID-19 crisis, the global oil price collapse, and Angola’s subsequent currency depreciation, 

reaching nearly 127% of GDP by end-2020. These shocks have put further pressure on public 
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finances and worsened Angola’s debt outlook. Since the end of 2020, Angola’s economy has

gradually begun to recover, and public debt has decreased to about 110% of GDP. The IMF 

expects Angola’s public debt decline to about 104% of GDP by the end of 2021. 

Despite mixed performance on its economic and structural reform program, the Angolan 

authorities have shown a commitment to maintain fiscal and monetary discipline in a challenging 

external economic environment and have taken important steps to liberalize their currency 

regime. They have also committed to addressing external debt issues, including with China. 

With successful implementation of its program, we expect Angola to repay the IMF in full. 

Debt Status

Angola’s debt sustainability worsened significantly in 2020 due to lower oil production and the 

depreciation of the overvalued kwanza. Angola is liberalizing its exchange rate under its IMF 

program, and while this depreciation largely reflected underlying economic conditions, it 

significantly increased the burden of Angola’s large outstanding stock of external debt (101% of 

GDP at end-2020, up from 79% at end-2019.) 

Following the peak in public debt in 2020, Angola’s public debt-to-GDP ratio has started to 

decline in the first half of 2021. As part of the most recent review in June, the IMF projects 

public debt-to-GDP to decline to about 62% of GDP by 2027, slightly better than projections 

earlier in 2021, although worse than projections in 2020, which had public debt-to-GDP below 

60% by 2027. However, public debt dynamics remain vulnerable to shocks, especially around 

production and the global price of oil. Although oil prices have started gradually recovering

(from a low of nearly $20/barrel in 2020 to consistently over $70/barrel in June 2021), Angolan 

oil production dropped 8% in 2020 and remained weak into 2021.

Debt Management Strategy

The Angolan authorities have committed to reducing their non-oil primary deficit by 2.4 

percentage points of GDP over four years to reduce debt pressures; IMF staff assessed in June

that continued strong oil revenue performance coupled with fiscal tightening would rapidly 

reduce public debt to a manageable level.

Additionally, the Angolan government has reduced its issuance of domestic debt, including 

issuance of bonds indexed to or denominated in foreign currency, thus reducing their exposure to 

further depreciation pressures. Authorities have also pledged not to contract any further external 

debt backed by oil revenues and are tightening the use of state guarantees of debt to reduce 

future contingent liability risks.

IMF staff assess that Angola’s debt reprofiling in 2020, robust fiscal consolidation and debt 

service relief under the G20/Paris Club’s Debt Service Suspension Initiative (DSSI), will be 

sufficient to return its debt to a sustainable trajectory. Under the DSSI, bilateral official creditors 

agreed to suspend debt service payments through the end of 2021. According to data provided to 

the G20, Angola has benefitted from over $1 billion in debt service relief from its DSSI request 

since 2020. 
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Vulnerabilities

Significant risks exist to Angola’s performance under the EFF. Key among them are continued 

oil price weakness due to the global economic slowdown from the COVID-19 crisis, which will 

increase fiscal pressure and raise Angola’s debt levels. Further rapid exchange depreciation, 

potentially driven by external economic conditions, could further increase Angola’s debt burden.

Against these risks, IMF credit outstanding to Angola will remain elevated but manageable at 

around 7% of GDP and 40% of Angola’s gross international reserves, and Angola’s oil resources 

provide a natural, albeit imperfect, hedge against significant currency depreciation. Angola’s 

program performance has improved in the past year, when the government successfully met all 

but one performance criterion for its last IMF program review. The authorities have shown 

strong commitment to economic reforms and willingness to tighten fiscal and monetary policy 

appropriately in response to external shocks. The authorities demonstrated restraint on current 

spending and approved new non-oil revenue measures. The central bank has taken action to 

drain excess liquidity from the market and increased bank reserve requirements. 

Overall Assessment

While Angola’s debt levels and trajectory remain concerning, its ongoing engagement with the 

IMF and commitment to maintaining appropriate fiscal and monetary policy – while seeking to 

reprofile its Chinese-held debt – should improve its repayment prospects over the medium term. 

Further, Angola’s substantial oil revenues provide a strong basis for supporting repayments of its 

external debt obligations. Based on these factors and the IMF’s status as a preferred creditor, the 

Treasury Department assesses that the IMF’s loan to Angola is likely to be repaid in full.