Angola mulls slowing fuel subsidy removal after protests – finance minister

Angola may slow the removal of fuel subsidies to avoid a repeat of protests in June over a near-doubling in petrol prices in which at least five people were killed, the southern African country’s finance minister said on Monday.

No decision has been made yet in ongoing internal discussions on whether to extend the end-2025 deadline for phasing out the subsidies, Vera Daves de Sousa told Reuters in an interview on the sidelines of the International Monetary Fund and World Bank’s Annual Meetings.

Squeezed by soaring debt costs and high pump prices, governments across Africa are trying to dismantle the costly benefits, but the moves are proving unpopular and have also sparked discontent in countries including Senegal and Nigeria.

“We are learning the lessons from the first movement (in fuel prices), where society reacted with shock,” Daves de Sousa said.

Angola spent 1.9 trillion kwanza ($2.3 billion) on fuel subsidies in 2022, more than 40% of what the IMF estimated it spent on social programmes.

Economic growth is likely to be just 1.09% this year, down from a forecast of 3.3% in the 2023 budget, due to low oil production meaning the oil sector is shrinking, Daves de Sousa said, adding that the forecast was 1.5% for 2024.

The 2023 budget had been prepared with oil production of 1.1 million barrels per day in mind, but it is currently averaging between 1 and 1.1 million, she said, adding that the assumption for the 2024 budget would be less than the previous budget’s.

Angola is seeking to diversify its oil-dependent economy by increasing agriculture and agribusiness’ share of GDP from 8% to 14% by the end of 2027 and to 19% by 2050, Minister of Economy and Planning Mario Caetano Joao said in a separate interview.

It is also targeting reducing oil’s share of GDP from around a quarter to 20% by end-2027 and 10% by 2050 – when it expects oil output to be 500,000 barrels per day.

Stabilising oil production will also help Angola’s debt position, Daves de Sousa said. About 20% of its debt is collateralised, including 80% of its debt to Chinese lenders, which account for about a third, she said.

There are currently no plans to tap international capital markets, Daves de Sousa said. Most of Angola’s overseas dollar bonds currently yield more than 13%.

“More comfortable is something around 5 and 6 (%), but we know we are quite far from that,” she said.

The planned privatisation of state-oil firm Sonangol has been delayed due to ongoing corruption-related lawsuits aimed at recovering assets, Daves de Sousa said, with the aim now to sell less than half of the company in 2025.

Source: Reuters