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Measures adopted to counter impact of low oil prices

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General Information

GDP USD131.401bn (World ranking 60, World Bank 2014)
Population 22.14 million (World ranking 55, World Bank 2014)
Form of state Republic
Head of government Jose Eduardo DOS SANTOS
Next elections 2017, legislative

Country Rating C3note-circle-sensitive-risk


  • Elections, although not without logistical problems, have been conducted relatively peacefully and the results accepted by opposition forces, thereby assisting the country’s progress in entrenching political stability
  • Despite bordering DR Congo, there are no significant threats to security from external forces
  • Membership of OPEC. Angola rivals, Nigeria, as the leading Sub-Saharan African oil producer, with reserves calculated to provide over 19 years of further output at current rates of extraction
  • In addition to hydrocarbons, possesses significant natural resources through its mining (including diamonds) and agricultural sectors


  • With crude oil accounting for 98% of export revenues, the economy is susceptible to volatility in global markets and to potential large swings in oil prices
  • Rebuilding and reconstruction of economic and social communities after a debilitating civil war require considerable resources
  • Persistent pockets of high level poverty
  • Perceptions of corruption, particularly in relation to the lack of transparency in oil accounts, have limited local confidence in the country’s leadership and prevented full IFI support and investment from the western world in the non-oil sectors
  • Data provision remains uneven

Economic Overview

Lower oil prices have weakened the economy and induced countervailing measures from the authorities…

Oil accounts for around 98% of exports and 75% of government revenues. Therefore, current weak commodity prices (benchmark crude Brent -50% y/y in early September 2015) are limiting FX earnings, government receipts and overall economic growth. In 2012, fiscal and current account surpluses were +4.6% and +12% of GDP, respectively. In 2015, EH expects both accounts will record substantial deficits of -8.7% and -6% of GDP, respectively. Additionally, the kwanza (AOA) is under downward pressure and inflation is increasing. Annual average GDP growth in the ten years to end-2014 was +10% but EH forecasts +3.5% in 2015 and +4% in 2016.
In response to the economic impact of weaker oil prices the Central Bank tightened liquidity conditions by increasing the key policy interest rate and banks’ mandatory reserve requirements. Additionally, the government cut markedly its spending plans, including on goods and services and some subsidies and also on some non-essential capital projects. In the current fiscal year, the government is using an oil price of USD40/barrel in its revised calculations.
Financial support will be made available through the World Bank and the government is likely to increase lending and perhaps issue a Eurobond. Moreover, bilateral credit lines will be extended by, in particular, with China and Brazil. In need, the IMF will provide support.

…which, in turn, are increasing commercial and trading risks

With financial assistance likely to be readily available, the risks are unlikely to be sovereign. Rather they will be at a corporate level. The economic downturn and official measures to preserve stability, including project cancellation and/or delay, have increased payment disruptions and default risk. The construction sector, in particular, is being squeezed and insolvencies and company failures are likely to be increasing.

Planning for the future

The national development plan, Angola 2025, aims at limiting structural rigidities and enhancing economic diversification away from the upstream oil sector. The IMF suggests that this requires effective programmes to improve infrastructure, expand human capital and lower the cost of doing business in the country. The Fund also promotes greater transparency in the country’s financial accounts. It remains to be seen whether the sovereign wealth fund (SWF) will improve management of oil revenues. The SWF announced its broad portfolio investment strategy in September 2014 but current weak oil revenues may result in some of the fund being used to provide further domestic financial stability.
Last review: 9/10/2015