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The government of Angola has cut spending by half this year as a result of fallen oil revenues. Angola’s Vice President Manuel Vicente stated this on Thursday, while speaking to lawmakers in a state-of-the-nation address in the Capital, Luanda.

Declined commodity prices have led to fiscal shocks and economic slowdown in commodity exporting nations, the world over. Angola is Africa’s third-largest, and sub-Saharan Africa’s second-largest crude oil producer.

The Vice President said public investment was reduced by 53%. According to the IMF, oil accounts for over 95% of Angola's exports and about 75% of fiscal revenue. The IMF has called for a “structural fiscal reform” to increase the non-oil revenue base to mitigate the risk of fiscal shocks occasioned by volatility in crude prices, which have more than halved since June last year.

In its Article IV Mission to Angola completed in August, the IMF said “Over the medium term, fiscal policy should aim at restoring fiscal buffers by setting public debt on a declining path and achieving fiscal consolidation through structural fiscal reforms. Increasing the non-oil revenue base by rationalizing tax incentives and strengthening the newly created tax administration agency (AGT) is a priority. With a view to do more and better in the context of lower revenues, the quality of capital spending can be improved by strengthening the processes to evaluate, select, and monitor projects in the public investment program."

Low oil prices have created a perfect storm of macroeconomic instability in oil producing nations across Africa resulting to exchange-rate volatility, inflationary concerns as local currencies depreciate. The central bank of Angola has devalued the currency twice this year and raised the benchmark interest rate four times. The kwanza has slumped 24%against the dollar in 2015.

“We have had a contractionary fiscal policy, which has been guided by an amending of the state budget, embodied in a reduction of spending and more cautious revenue management,” Vicente said. “All this was possible thanks to the intervention of monetary policy and the injection of resources to cope with the current situation.”

The vice president said Agola’s debt is estimated to reach 45.8% of GDP. “At this time, the macroeconomic indicators show us some stability and more encouraging prospects for the future, although they require a continuation of work that has been done so far,” Vicente said.

Angola’s economic growth is projected to average 3.5% between 2015-2016, according to the IMF. Last week, the IMF downgraded the growth forecast for Nigeria, Africa’s largest economy and largest oil producer, to 4% from 4.8% earlier projected for 2015.