Angola: Financial Sector Assessment Program-Financial System Stability Assessment

This paper on Angola highlights the Financial Sector Assessment Program report. Angola’s oil-dependent economy showed signs of recovery in 2024, although sovereign and private financing conditions remained constrained. The country’s bank-dominated financial sector is relatively small and generally well-capitalized, but several vulnerabilities persist, including high levels of nonperforming loans, strong links between banks and sovereign debt, and exposure to foreign exchange and climate-related risks. Strengthening systemic risk analysis and macroprudential policymaking is essential, particularly through improvements in data quality, institutional coordination, policy tools, stress testing frameworks, and public communication. Regulatory and supervisory frameworks for banks also require significant reforms to support a more risk-based and forward-looking supervisory approach, including greater supervisory capacity and improved data systems. In addition, components of the financial safety net and crisis management framework need enhancement, such as bank resolution mechanisms and emergency liquidity assistance arrangements. Addressing weaknesses in the Combating the Financing of Terrorism framework is equally important to support Angola’s removal from the Financial Action Task Force grey list and enhance financial stability.