Angola is expected to grow by less than 3% every year until 2020 following a drop in revenues of over 50% since 2014, forcing the government to increase public debt to 71.5% of gross domestic product (GDP), said the African Development Bank (ADB) in its Africa Economic Outlook report, released on Wednesday in Abidjan, Cote d’Ivoire.
“Public debt rose from 65.4% of GDP in 2015 to 71.5% in 2016, reflecting the increase in commercial market financing to fund the budget deficit in a context of high domestic interest rates and weak oil revenues,” said the ADB.
The bank estimates that Angola avoided recession in 2016, growing by 0.1%, accelerating last year to 2.1%, lower than the 2.4% for this year and 2.8% for the next and adds that due to low oil prices “GDP growth between 2011 and 2015 was 4.7%, down from 12.6% between 2006 and 2010.”
Mozambique, for its part, was hit by the public debt crisis, with coal exports and agricultural production expected to grow 5.3% this year, after rising by 4.7% in 2017.
After years of increased spending, “pushing debt to unsustainable levels, the government went into default on sovereign bonds in January 2017, and, financially constrained, is now making efforts to consolidate,” according to the report, which accounts for a drop in spending from 33.9% in 2017 to 30.5% this year.
“The declining prices of traditional export goods, persistent drought effects of El Nino, internal military clashes, and a sharp decline in foreign direct investment nearly halved the 7% average historical GDP growth over the past decade to 3.8 %, in 2016, which was aggravated by the governance crisis of 2016, leading to reduced external financing and donor support.”
The ADB said that Cabo Verde (Cape Verde) is expected to see a growth of 4% this year and that diversification of the economy remains a priority for sustainable and longlasting growth.
“Following weak GDP growth, averaging 1.8% between 2010 and 2015, the economy recovered in 2016, growing by 3.8% driven by agriculture and services (mainly tourism); internal demand showed signs of recovery, due to an increase in public spending and private credit,” said the ADB report.
“This trend continues, with estimated GDP growth of 4% in 2017 and, likely, 4.1% in 2018, driven by the recovery of tourism,” the report added. (macauhub)