Angola: Technical Assistance Report-Strengthening the Forecasting and Policy Analysis System on the Transition to Inflation Targeting

At the request of the Banco Nacional de Angola (BNA), a technical assistance (TA) mission from the Monetary and Capital Markets (MCM) Department visited Luanda, Angola from May 20 to May 24, 2024. The mission helped the authorities review its forecasting and policy analysis system (FPAS), proposed enhancements to modeling and forecasting procedures, and introduced fiscal channels into the core forecasting model to better characterize the dynamics of the Angolan economy. The mission concluded that while the BNA had made impressive progress in improving its FPAS in recent years, the current system only partially met the conditions for inflation targeting. Recommendations were made to facilitate the transition to full inflation targeting and enhance analytical capacity. Further progress is needed in using FPAS models for forecasting, policy advising, and improving monetary policy communication.