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The kwanza, Angola’s national currency, has depreciated by about 40% against the US dollar due to the contraction of oil production levels, the Angolan Minister of Economy and Planning announced today.
Mário Caetano João shared these figures at the opening of the 2nd edition of the Angola Economic Outlook 2023, held today in Luanda, under the theme “Human Capital as a Decisive Factor for Development,” organized in partnership with the magazine Economia e Mercados.
The Angolan government official emphasized that Angola expects to record economic growth for the third consecutive year, noting that the International Monetary Fund (IMF), in its most recent World Economic Outlook publication, forecasts a growth rate of 1.3% for the Lusophone country. However, the government’s projections indicate slightly lower growth, at 1%, due to the decrease in oil production.
For the General State Budget (OGE) for 2024, the Angolan government adopted a “conservative” oil price of $65 per barrel and a reduced daily oil production of 1.060 million barrels.
According to the minister, the contraction in oil production levels created a scenario of reduced availability of strong currency in the foreign exchange market in the first half of this year, resulting in the kwanza depreciating by about 40% against the US dollar.
“This environment of economic slowdown and the foreign exchange market severely affected the process of consolidating public accounts and the stability of the general price level in the economy, with year-on-year inflation reversing its decreasing trend in May, reaching approximately 15% in September of this year,” he noted.
Regarding the kwanza depreciation, the Deputy Governor of the National Bank of Angola (BNA), Pedro Castro e Silva, mentioned that for 2024, it is expected that African countries will continue to have limited access to the debt market, indicating that there will be no change in foreign currency availability in the local foreign exchange market.
For 2024, the IMF forecasts a 3.3% growth for the Angolan economy, while the government projects growth of 2.8%, primarily driven by the non-oil sector.
In his presentation, the Secretary of State for Planning, Milton Reis, stated that the most recent data indicate “very low” growth in 2023 but foresee an acceleration in the coming years based on measures the government began implementing in June of this year.
Milton Reis emphasized that the weak growth in 2023 is due to the declining trend in oil production due to old fields and the absence of new discoveries, highlighting the continued robust growth and maintenance of the non-oil sector, which is expected to grow above 4% in 2024.
Regarding prices, the country continues to face pressure in the current year, primarily driven by food products.
The Angolan Secretary of State for Planning highlighted that the Angolan economy continues to face risks, including the weak global economic recovery, the level of oil production, which remains the country’s main source of foreign exchange needed to drive the non-oil sector.
“When we have difficulties in the oil sector, it also affects the entire non-oil economy, so we need to continue to look at oil with the importance it has for our economy, despite all the efforts in diversification, we need the resources from the oil sector to accelerate this diversification dynamic,” he emphasized.
