Angola could spend up to 3.8 trillion kwanzas ($4.16 billion) on fuel subsidies this year, nearly double its initial projections of less than 2 trillion kwanzas, a senior finance official told Reuters on Friday.
The increase underscores the fiscal strain facing the oil-producing nation, as surging energy prices from the ongoing war in the Middle East drive up the cost of keeping domestic fuel prices low.
The mounting bill is adding pressure on the government to accelerate its gradual removal of subsidies, which began in 2023, but authorities are wary of moving too quickly for fear of economic and social fallout, Ottoniel dos Santos, Angola’s secretary of state for finance and the treasury, told Reuters.
“We need to move not only with the subsidies removal, but also with the diversification of our economy,” said dos Santos in an interview on the sidelines of the annual meetings of the International Monetary Fund and World Bank in Bangkok.
“For now, it’s been taken as it is – slowly,” he added, referring to the scaling back of subsidies. “But if there is any window that could be used… and if we expect the impact on those who are more vulnerable are less than we forecast, then it will be easy to implement.”
The country now expects oil prices to average around $90 per barrel by the end of the year, higher than the reference price of $61 it used in its 2026 budget.
Although the government has yet to submit its 2027 budget, due at the end of the month, dos Santos said its oil price assumption would not differ significantly from the International Monetary Fund’s forecast of $71.50 a barrel.
The government expects crude production to come in at 1.045 million barrels per day in 2027, matching this year’s output.
DIVERSIFYING FUNDING NEEDS
Angola’s $4 billion Eurobond issuance and other liability operations have covered the “majority” of the country’s funding needs this year, dos Santos said, with any plans for further bond issuances or external financing dependent on the 2027 budget.
“This is something that we will have to see what will be the needs for 2027 and identify if there is an opportunity or not for us to come back to the market,” he told Reuters, adding that the country is actively opening up its domestic government bond market to foreign investors.
The government is welcoming “all investors, all the regions” to buy Angolan debt, and is stepping up efforts to educate investors on access to its capital market.
“Some investors think that the capital account is still closed, that it’ll be difficult to get out when they get in, but actually it’s not happening,” said dos Santos.
“We want to go everywhere, we want them to come as well… we want people to know that Angola is opening the domestic market to get opportunities from other investors, from other countries.”
