Angola exposed to more risk from austerity and uncoordinated reforms

11 February 2016

Applying “disorderly” budget cuts and structural reforms may bring more risks to Angola, beyond those associated with its excessive dependence on oil, according to the office of economic reports at Portuguese bank BPI.

“The short-term outlook continues to present major challenges due to the adverse external climate, as international oil prices should not quickly recover to levels seen in the past,” said the BPI analysts in a research note to African markets.

According to the BPI analysts, negative impacts can also arise from abroad, mainly from the monetary policy decisions of the United States, whose rise in interest rates affect the emerging markets in general and Angola in particular.

In the analysis of the challenges for this year, the analysts said they believed that “despite macroeconomic data having improved (…) the prospect of development of the economy remains vulnerable to a slow recovery in oil prices.”

Increased oil production in recent months, which helped overcome the effect of low prices, “was not, however, sufficient to prevent a significant drop in tax revenues and exports,” the document said. (macauhub/AO)