Angola’s 2007 state budget proposals forecast 31.2 pct GDP growth

31 October 2006

Luanda, Angola, 31 Oct – The macroeconomic scenario of the 2007 state budget proposals that the Angolan government has recently presented to parliament envisage growth of Gross Domestic Product (GDP) by 31.2 percent and inflation rounding off at 10 percent.

The proposals also predict a budget deficit of US$ 1.709 billion, equivalent to 3.3 percent of GDP.

The Angolan government’s fiscal blueprint for 2007 also forecasts real growth of 33.6 percent in the petroleum sector, with non-oil sectors expected to show growth of 27.9 percent.

The 2007 state budget, presented last Thursday to lawmakers in Luanda, predicts oil production next year will total 736.7 million barrels at an average price per barrel of US$ 45.

The government estimates tax revenues will represent 37.5 percent of GDP, with oil sector earnings accounting for 78.8 percent of total forecast receipts.

In relation to expenditure, the 2007 budget forecasts that 64.3 percent of spending will be on current expenses, with capital expenditure accounting for the remaining 35.7 percent.

The budget plan for next year that the government hopes to approve in parliament attributes some 28.1 percent of total predicted expenditure to the social sector, the major beneficiary of state funding.

Public administration is to receive 22.6 percent of total state spending for 2007, followed by items categorized under financial responsibilities, with 22.4 percent, representing a substantial increase over the current budget, and including repayment of outstanding debt to members of the Paris Club group of creditor states.

The economic sector is the target for 14.1 percent of total expenditure forecast for next year, while the defense and policing sectors account for 12.7 of spending.

In relation to financial operations outlined in the budget plan, the government predicts the application of around US$ 2 billion from oil bonuses in Treasury Reserves, in addition to US$ 157.1 million in business assets and social security investments.

Amortization of foreign debt will absorb US 4.4 billion next year, including US$ 2.3 billion in relation to the outstanding debt to the Paris Club creditors, while amortization of national debt will reach US$ 1.4 billion.

With the implementation of the proposed budget the Angolan government estimates a net increase in foreign debt of US$ 2.3 billion, as overseas debt is forecast to climb to around US$ 17.4 billion, or 33.9 percent of GDP.

Together with its budget plan, the Luanda executive also presented its 2007/2008 government plan, which has the key objectives of consolidating peace and national reconciliation, creating conditions to build a self-sustaining economy and the re-establishment of state administration in all parts of the country. (macauhub)