KEY POINTS
- Angola’s finance minister warns of economic pressure from declining oil prices.
- Angola considers gradual fuel subsidy phase-outs to ease the fiscal impact.
- New IMF program and other financing options are under review to stabilize the economy.
Given Angola’s reliance on petroleum revenue and the impending phase-out of gasoline subsidies, the country’s finance minister, Vera Daves de Sousa, expressed concerns about the potential economic impact of lower oil prices.
She predicted an average oil price of $70 to $72 per barrel, down from the $75 recorded in 2024, in a talk with Reuters during the IMF and World Bank meetings in Washington.
Economic strain from declining oil revenues
Angola is the second-largest oil exporter in Africa, and a significant amount of its budget comes from oil sales.
Economic difficulties would worsen as a result of lower oil prices, particularly if the government gradually eliminates gasoline subsidies, as Daves de Sousa affirmed. At the moment, gasoline subsidies account for almost 4 percent of Angola’s total GDP.
Analysts believe that rising production and falling demand will push oil prices lower, with Brent crude futures hitting $76.05 per barrel.
Angola, which left the Organization of the Petroleum Exporting Countries (OPEC) earlier this year, is looking into ways to lessen the effects of declining oil earnings, the finance minister emphasized.
Potential IMF program and alternative financing
Daves de Sousa suggested that in order to support its economy, Angola might look into a new funding arrangement with the International Monetary Fund (IMF).
Following a sharp decline in oil prices that put a burden on the nation’s finances, Angola launched its most recent IMF program in 2018, which was worth $3.7 billion.
The government has asked the IMF for advice on program options that fit Angola’s stability objectives and economic needs.
Alternative financing options were also discussed by Daves de Sousa, including assistance from domestic banks and capital markets, as well as collaborations with international organizations like the World Bank and the African Development Bank.
These proposals for outside funding will be covered in detail in Angola’s budget proposal, which is expected to be presented to Parliament next week.
Shifting policies to stabilize Angola’s economy
Daves de Sousa stressed the need for gradualism in the processes, which are aimed at reducing subsidies in as far as Angola gradually adjusts an overall financial plan in light of new tendencies in the global oil market.
She said that due to avoiding adverse social impacts, the government would stop providing fuel subsidies in phases.
The updated Angolan economic plan is an ambitious plan that balances the challenges presented by a volatile oil market with steps to keep the nation’s economy afloat in a resource-dependent climate.
