Angola’s budget deficit expected to be around 6.5% in 2017/2022, EIU says

7 December 2017

Angola’s budget deficit is expected to range from a maximum of 7.2% of gross domestic product (GDP) in 2020 to a low of 6.1% in 2018 and 2022, according to forecasts in the latest Economist Intelligence Unit report (EIU) about the country.

With a slight change from the report produced in November, this new document, which also covers the 2017-2022 period, predicts that economic growth will fluctuate by 2.0% each year, with the exception of 2022 with a rate of 3.0%.

“Economic growth in the period under analysis will be just 2.6% on average, which compares with the average rate of 4.7% between 2011 and 2015, given that the economy will be fundamentally supported by the oil sector, given small-scale efforts for the diversification of the economic fabric,” according to the EIU analysts.

The document adds that although inflation is expected to decline compared to the peak recorded in 2016, it should remain high due to continued devaluation of the national currency, with analysts predicting that this year inflation will be 29.9%, and begin to decline from 2018 and reach 9.1% in 2022.

At the beginning of December, the Monetary Policy Commission of the National Bank of Angola raised the benchmark interest rate by two percentage points, from 16% to 18% in an effort to slow the rise in consumer prices in the country.

The EIU said in its report that Angola’s currency will continue to depreciate, leading the exchange rate of the kwanza against the dollar to change from the current official value of 166.5 kwanzas to 211.5 kwanzas per dollar at the end of the period.

The report added that because of the lack of dollars in the market, with the National Bank of Angola selling only euros as a result of there being no correspondent banks for the US currency, the difference between the official and the black market rate will remain high. (macauhub)