Angola is broke, President finally confesses

Thursday June 23 2016

Angola’s President José Eduardo dos Santos says

Angola’s President José Eduardo dos Santos says his country is broke. PHOTO | AFP 

By ARNALDO VIEIRA in Luanda

Angola’s President José Eduardo dos Santos has confessed that his country is broke.

The leader attributed the situation to failure of the national oil company Sonangol to remit cash to the government.

Angola is the second-largest producer of crude oil in Africa and is regularly cited as one of the continent’s fastest growing economies.

The country relies on crude exports for two-thirds of tax revenue, and 95 per cent of its foreign currency receipts.

Analysts however say the billions of oil dollars flowing in have not benefited the ordinary people, and have only succeeded in to the emergence of an elite few.

The United Nations notes that while the economy has been growing at more than 7 per cent annually, 38 per cent of its 26 million people Angolans still live in poverty.

The southern African country has been managed in an “extremely complicated environment” due to the lack of foreign exchange originated by the depression of the oil price in the international market, President dos Santos stressed.

The president, who addressed his cabinet council meeting on Wednesday at the southern Moxico province also said the country’s economy is recording just 1 per cent growth contrary to five and six per cent in a recent past.

Weaker Kwanza

“This means our economy is decreasing drastically and since January the government has not got revenues from Sonangol ...due to the oil depression price” he added.

According to the President the country is now without money to import goods since it relies heavily in imports.

Last week, the International Monetary Fund (IMF) said the Angolan economy continues to be severely affected by the oil price shock experienced in the last two years.

Economic growth slowed to 3 per cent in 2015 driven by a sharp slowdown in the non-oil sector.

“Inflation has accelerated and reached (year-on-year) 29.2 per cent in May 2016, reflecting a weaker kwanza that has depreciated over 40 per cent against the US dollar since September 2014, higher domestic fuel prices following the removal of fuel subsidies, and loose monetary conditions, ” IMF reported.

According to the international lender, the external current account balance has moved into deficit, although international reserves have been protected and remain at relatively comfortable levels.

However, further steps are needed to reduce vulnerabilities, and maintaining fiscal prudence in the run-up to the 2017 elections will be critical, IMF added.