• AFRICAN BUZZ
ANGOLA:
ANGOLA TAKES A HIT
The Angolan economy is expected to contract by 4.1% in 2020,
according to the latest forecast of the Economist Intelligence Unit
(EIU) for the country, which compares with a previous projection
of -2.6%, as a result of the fall in oil prices and the effects of the
Covid-19 pandemic.
The document notes the fight for market share between Russia and
Saudi Arabia and the drop in demand following the emergence of
the new coronavirus that led to a fall in prices of the main product
exported by Angola. The cost of a barrel of oil is now expected to
oscillate at around USD32 this year, whereas previous estimates
pointed to a figure of about USD60 per barrel.
Angola’s General State Budget for 2020 was prepared on the basis
of a price of a barrel of oil of USD55, and the Minister of Finance,
Vera Daves de Sousa, announced she is preparing a review of the
document in order to adapt to the new situation, which will be based
on a price of USD35 per barrel of oil.
The official statement issued at the end of March said that there would
be a “slight drop in oil production that will total 1.36 million barrels of
oil per day and production levels of diamonds will be maintained, and
whose average price per carat is reduced from USD162 to USD100.3”.
In relation to these structural measures and measures to
macroeconomic reprogramming, the minister warned that with
the drop in income the country will see a worsening of devaluation
and higher-than-expected inflation. Consequently, she noted, the
macroeconomic forecasts for 2020 point to a recession in 2020
of around 1.21%, as a result of the degradation of the economic
framework.
Both the minister’s statement and the EIU projections are out of
step with the agreement reached by the Organisation of Petroleum
Exporting Countries (OPEC) and non-member countries to bolster
the recent fall in oil prices is expected to lead to a cut in Angolan oil
production to around 1.1 million barrels per day.
The cut in production, decided on 9 April, will be 23% for all signatory
states and is based on October 2018, at which time Angola had daily
production of 1.53 million barrels, which after reviewing the level, will
entail a reduction to 1.18 million barrels per day.
The country has produced between 1.3 million and 1.4 million barrels
per day in recent months, down from more than 1.6 million registered
in 2017 and 2018, according to the OPEC reports.
The EIU forecasts for the remaining years analysed in this report, from
2019 to 2024, indicate that the Angolan economy will return to growth
in 2021, although at a marginal rate of 0.1%, before moving to more
expressive figures, of 3.4% and 3.6% in 2022 and 2023, respectively,
and 5.8% in 2024.
The rate of inflation is expected to remain high, increasing to 24%
this year before heading downward as the depreciation of Angola’s
currency is reduced, and prices are expected to increase on year by an
average 10.4% in the period from 2021 to 2024.
The kwanza, for its part, will continue to lose value against the
major currencies, the dollar and the euro, and this year depreciate
to 536.8 kwanzas per dollar, after which it will keep losing value but
at a slower pace, and in 2024 is expected to reach a price of 584.2
kwanzas per dollar.
Source: macauhub
10 • African Mining •May 2020
www. africanmining.co.za