Angola mulls slowing fuel subsidy removal after protests – finance minister. According to Angola’s finance minister, the government in southern Africa may take its time eliminating fuel subsidies to prevent a repetition of the unrest over a nearly doubling in gasoline prices that occurred in June and resulted in at least five fatalities.
Vera Daves de Sousa told Reuters in an interview on the sidelines of the Annual Meetings of the International Monetary Fund and the World Bank that no decision has yet been taken in continuing internal deliberations about whether to extend the end-2025 date for phasing out the subsidies.
African governments attempt to deconstruct the expensive perks due to mounting debt bills and high fuel prices. Still, the measures are controversial and have prompted unrest in nations like Senegal and Nigeria.
“We are learning the lessons from the first movement (in fuel prices), where society reacted with shock,” Daves de Sousa stated.
In 2022, Angola spent 1.9 trillion kwanza ($2.3 billion) on gasoline subsidies, more than the IMF’s forecast of the country’s social program spending by more than 40%.
Due to poor oil output, which causes the oil industry to contract, Daves de Sousa stated that economic growth is anticipated to be just 1.09% this year, down from an estimated 3.3% in the 2023 budget. He also noted that the forecast was 1.5% for 2024.
She said that although the expectation for the 2023 budget was 1.1 million barrels per day of oil output, the actual production is now averaging between 1 and 1.1 million. She also mentioned that the 2024 budget will be lower than the 2023 projection.
According to Mario Caetano Joao, the minister of economics and planning, Angola is attempting to diversify its oil-dependent economy by raising the contribution of agriculture and agribusiness in GDP from 8% to 14% by the end of 2027 and 19% by 2050.
Additionally, it aims to reduce oil’s contribution to GDP from almost a quarter to 20% by the end of 2027 and to 10% by 2050, when it anticipates daily oil production will be 500,000 barrels.
According to Daves de Sousa, stabilizing oil output will ease Angola’s financial situation. She said that 80% of its debt to Chinese lenders, who make up approximately a third, is collateralized, making up around 20% of its total debt.
According to Daves de Sousa, there are no present intentions to access foreign financial markets. Most of Angola’s foreign dollar bonds presently have yields of over 13%.
“More comfortable is something around 5 and 6 (%), but we know we are quite far from that,” she stated.
According to Daves de Sousa, continuing cases involving corruption that are intended to recoup assets have caused the planned privatization of state-owned oil giant Sonangol to be postponed. Less than half of the corporation is now expected to be sold in 2025.
