Angola: Amending budget may be required if oil prices fall – Standard Bank

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Angola: Amending budget may be required if oil prices fall – Standard Bank

8:53 CAT | 24 Apr 2025

Photo: Ver Angola

Standard Bank’s executive director for Angola, Mozambique and the Democratic Republic of Congo believes that the current international economic situation makes it advisable to rectify the budget in Angola, which should be done early to assess its impact.

Fáusio Mussa, who spoke on Tuesday night at the first edition of the 2025 SBA Economic Briefing on the theme “Angola, Growth beyond Oil”, said that uncertainty and volatility would characterise much of this year, essentially affected by policies from the United States of America (USA).

According to the official, the tariffs implemented by Donald Trump’s government have been disrupting the market, although the International Monetary Fund (IMF) in its outlook for the evolution of the global economy considers that there will be no recession.

“The IMF suggests that this is not a recession scenario, but it has revised its economic growth forecasts for the global economy,” said the same official, believing that “after this initial period of trying to implement rates at a certain volume, there may be a reflection and a correction, and that in the end there will be less disruption in the world economy.”

The senior Standard Bank economist emphasised that the implications for Africa and Angola in particular would be that China, a major economic partner of the African continent, which is growing at a slower pace, would import fewer raw materials from countries that depend on commodity exports to that country.

“The first impact would be a lower volume of exports, because there is less demand. The second impact would be the price. We know that President Trump wants the price of fuel to be slightly lower than it is at the moment, he is encouraging an increase in oil production,” he said.

In Angola’s case, an oil price lower than that projected in the State Budget (70 dollars per barrel) means that “some adjustment will be necessary”.

“Our suggestion, from an economic point of view, would be that the sooner we discuss the impact of this situation on the State Budget, and if we conclude what measures are needed to avoid a fiscal deficit, which then creates pressure on public debt, the sooner that happens, the better,” he said.

According to Fáusio Mussa, timely rectification “reduces the uncertainty that exists in the economy” and allows economic agents to foresee what kind of changes might occur because of the international situation and its impact on the domestic economy.

“Thirdly, it allows Angola to maintain some of the fiscal discipline it has become accustomed to in recent years, especially in 2024. We’ve seen domestic and external debt reduce due to a primary fiscal surplus. It would be good for this discipline to be maintained because it helps to reduce the weight of debt servicing in total revenue and create fiscal space for investment spending on infrastructure,” he added.

Standard Bank forecasts Angola’s inflation to be around 25% by the end of the year, considering a new adjustment to fuel prices.

Fáusio Mussa emphasised that inflation in Angola is a phenomenon reflected in a constantly changing and insufficient supply of foreign currency.

Reducing inflation, he suggested, would involve, for example, greater incentives for local production, considering that “increasing the production of local goods and services is a way of helping to combat inflation,” which has been above 20% since December 2023.

The Angolan government predicts inflation of around 17% by the end of 2025.

Source: Lusa