Luanda - Angola recorded a slight improvement in the supply of foreign exchange in the foreign exchange market, during the first half of this year, with the availability of around 840 million dollars/month, on average, compared to close to USD 600 million recorded in the second half of 2023, according to Standard Bank economist Fáusio Mussá.
Speaking to the press, at the end of the 3rd edition of the 2024 Economic Briefing, which took place on Monday, in Luanda, the chief economist of Standard Bank for Angola, Mozambique and the Democratic Republic of Congo (DRC) said that, despite this improvement, the level of foreign currency supply is still insufficient to meet domestic market demand.
According to the expert, the current availability of dollars in Angola, which has a Gross Domestic Product (GDP) valued at close to 100 billion dollars, demonstrates that the market is operating with a level of foreign currency below what is needed. to meet demand.
He added that this situation can be minimized as the country generates fiscal space, through increased sales of foreign currency by the Treasury, with a view to reinforcing the supply of currency in the market.
Fáusio Mussá recalled that the National Bank of Angola (BNA) continues to protect the country's international reserves, a fact that has so far allowed it to maintain the current approximately 14.7 billion dollars, which corresponds to close to eight months of coverage import of goods and services.
He considered it to be a consistent and stable policy of the Central Bank, as it allows it to be among the best ratios in sub-Saharan Africa, in terms of import coverage.
This indicator, he continued, gives comfort to investors who finance the Angolan Government's projects and the economy in general.
“We have consistently seen that only in very specific moments does the Central Bank intervene, as it did in recent weeks, with the provision of 250 million dollars, to essentially allow the import of food and medicines”, highlighted.
Oil and diamonds continue to be the “flagship” of economic growth
When presenting the current situation of the Angolan and world economy, the chief economist recalled that, this year, Angola's economic performance has been above usual, with growth of around 4% recorded in the first six months of the year ongoing, compared to 1% in 2023.
He pointed to the acceleration of oil production, in the first quarter, as one of the main factors driving this growth, with the diamond sector being the one that contributed most in the second quarter of this year.
He also highlighted the reduction in Angola's total debt, with emphasis on the financing disbursements made recently, as one of the factors that will help the continued functioning of the Angolan economy.
He highlighted the fact of the substantial reduction in Angola's debt to China, highlighting the repayment of six billion dollars in capital in two years.
“No country can live without new debt, but it is important that debt service allows the economy to continue functioning”, he highlighted.
He mentioned that there was a decrease in Angola's dependence on oil exports or revenues from 98% to 94%, that is, in absolute terms, this reduction is still very small.
He recalled that, in recent times, there has been great pressure to respond to the social pressure that inflation generates, with the reduction of taxes on some basic necessities, such as VAT.
Economic prospects for Angola
For the expert, the rest of the economy shows some response, with some investment in agriculture, commerce, among other sectors, but it still records very weak growth, which means that, if oil and diamonds remain stagnant, Angola could register an economic slowdown in 2025.
For next year, Fáusio Mussá predicts that the positive basic effects of the oil sector “will be diluted”, because, in principle, it is estimated that crude oil production will remain at around one million and 100 thousand barrels per day, a fact that could slow down the Angolan economy next year.
According to its macroeconomic projections, the medium-term fiscal scenario considers that there will be sufficient investments to ensure that oil production in Angola remains between 1.1 or 1.2 million barrels/day, in addition to the investment that has already been made in this sector.
“If there is no increase in oil production and the price is below what was projected in the OGE/2025 – 70 dollars/barrel – it will be difficult for us to record the growth of around 3.9% seen in 2024 again, because the Angolan economy is still remains excessively dependent on oil”, he warned.
However, the economist foresees that this scenario could be minimized or reversed, if new economic reforms are advanced in the country, within the scope of a new financing program from the International Monetary Fund (IMF), which is currently being negotiated.
This plan, he said, will have a double advantage: allowing Angola to have access to more long-term financing, at lower costs than the cost of commercial debt; the other advantage is related to the continuity of economic reforms that were not completed within the framework of the first program that the country benefited from the IMF.
He defended continued economic diversification, with investments in new areas that allow generating the supply of external currencies, such as the Lobito Corridor, Namibe, among other infrastructures that can help reduce the impact of oil price volatility on the Angolan economy.
He mentioned that most projections for 2025 indicate that the price of oil will be lower compared to 2024.
Participants in the 3rd edition of the 2024 Economic Briefing, the last one this year, addressed the topic “Economic perspectives”, with a panel focused on the “Role of infrastructure investment in economic growth”.
The event was attended by several individuals, including experts from different fields, businesspeople and members of the Angolan Government, who reflected on possible scenarios for the Angolan economy, in particular, and the world economy, in general, in the coming years.
This year, Standard Bank's first Economic Briefing took place last April, with the theme “Angola's macroeconomic situation” and a panel debate that reflected on “Angola's geopolitical and macro situation: Capital Markets”. The second took place in June, with the theme “Angola and the demographic dividend”, with the debate focusing on education and economic growth.
Headquartered in Johannesburg, Standard Bank Group Limited is one of South Africa's largest financial services groups operating in 38 countries, 18 of which are in Africa. Historically, it was a branch of the British bank Standard Bank, called Standard Bank of South Africa. QCB/DOJ
