Angola’s finance minister has warned that the potential for declining oil prices is exerting significant pressure on the nation’s economy. In a recent interview at the IMF and World Bank annual meetings in Washington, Vera Daves de Sousa projected that oil prices are expected to average between $70 and $72 per barrel, a decrease from the previously anticipated $75 for 2024.
Daves de Sousa confirmed that the Angolan government will continue its strategy to gradually eliminate fuel subsidies, which currently represent around 4% of the country’s GDP this year. Earlier this year, Angola exited the Organization of the Petroleum Exporting Countries (OPEC), seeking greater flexibility in managing its oil resources.
On Friday, Brent crude futures settled at $76.05 per barrel after rising by 2.25%. However, analysts have cautioned that oil prices may face downward pressure in the coming year due to an oversupply in the market and weak demand.
The finance minister also revealed that the government is set to present its budget to Parliament next week, with final details on external financing needs expected to be confirmed soon. Angola is exploring the possibility of requesting a financing program from the International Monetary Fund, with Daves de Sousa noting, “We have requested information on potential programs in case we choose to pursue that option, considering our current circumstances.”
Furthermore, the government is assessing various funding alternatives, including support from multilateral institutions such as the World Bank and the African Development Bank, along with tapping into domestic capital markets and banks.
Angola’s last engagement with the IMF was a $3.7 billion program approved in December 2018, which was initiated in response to a significant drop in global crude prices that heavily impacted the country’s revenues.
