Angola: Despite a slowdown in growth, country not in recession

Angola’s economy will grow more slowly than expected this year, Vice President Manuel Vincente said on Thursday, as subdued oil prices sap public spending, hobble the currency and push up debt levels in Africa’s second largest crude exporter.

Vincente, who was delivering the state of the nation address in the absence of President Jose Eduardo dos Santos, said sub-Saharan Africa’s third largest economy would grow 4 percent this year, down from a previous forecast of 6 percent.

“We wait for the president to recover as quickly as possible,” the chairman of Angola’s parliament Fernando da Piedade Dias dos Santos said.

Angola’s economy has come under persistent strain since the global collapse of oil prices. The country relies on oil exports for two-thirds of tax revenue and 95 percent of foreign currency receipts.

Angola’s currency – the kwanza – has weakened more than 30 percent officially this year, but trades at a further 70 percent discount on the parallel market.

“The stability of the Angolan economy has been troubled by several sources of uncertainty that arose at international level and that have negatively affected the price of crude oil,” Vincente told parliament.

“The good news is that there will be no recession, but only a slight deceleration in the growth of the economy.” Angola has borrowed US$6 billion to fund capital projects in 2016/2017, Vincente said, adding that total debt-to-gross domestic product (GDP) levels would rise to 46 percent this year, compared to around 32 percent last year.

Since its civil war ended in 2003, Angola has tapped China for at least US$14.5 billion, Reuters data shows, boosting Beijing’s influence, Angola ships around half of its 1.7 million barrel per day of oil to China.

The country has cancelled plans for a US$1.5 billion Eurobond due to challenging economic conditions and has not set a new time frame for the issue.

Angola expected foreign investment flows over the next 2 years to reach US$10 billion, which should help diversify the economy from its reliance on oil, Vincente said.

Source: The Africa Report