Angola’s foreign reserves continue to fall in May, but at slower rate

25 June 2009

Luanda, Angola, 25 June – Angola’s foreign currency reserves totalled US$12.1 billion in May, having fallen since December of 2008, although the rate slowed between April and May, the Bank of Angola said in Luanda Wednesday.

The fall in the price of oil and diamonds on international markets, the main sources of foreign currency in Angola, is the reason why BNA’s foreign reserves have been falling since the end of 2008.

In December 2008 Angola had around US$17.5 billion in reserves, and this fell to US$16.6 billion in January, US$15.5 billion in February, around US$13.2 billion in March and to US$12.4 billion in April.

These figures, according to economists, show a stabilisation in reserves between April and May as a result of a rise in the price per barrel of oil seen in the meantime, which rose from around US$40 at the beginning of the year to around US$70 currently.

This fall between December 2008 and last May is due to the Government’s decision to make use of its foreign reserves to keep on track the infrastructure investment outlined in the national reconstruction programme, which began after the end of the country’s civil war in 2002.

The Angolan government, via its Oil Minister, Botelho de Vasconcelos, has said that the minimum price to maintain stability in the sector is US$75, which means that starting at this price the State will no longer need to use its foreign reserves to keep its public investments on track.

As well as a fall in the price of oil, Angola also had to deal with a lowered production quota of 1.65 million barrels of oil per day set by the Organisation of Petroleum Exporting Countries (OPEC), of which the country has been a member since 2007. (macauhub)