Angola could spend up \u200bto 3.8 trillion kwanzas ($4.16 billion) on fuel subsidies this year, nearly double its initial projections of less \u200cthan 2 trillion kwanzas, a senior finance official told Reuters on Friday.<\/p>\n
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.<\/p>\n
The mounting bill is adding pressure \u200bon the government to accelerate its gradual removal of subsidies, which began in 2023, but authorities are wary of \u200bmoving too quickly for fear of economic and social fallout, Ottoniel dos Santos, Angola’s secretary of \u2060state for finance and the treasury, told Reuters.<\/p>\n
“We need to move not only with the subsidies removal, but also with \u200bthe diversification of our economy,” said dos Santos in an interview on the sidelines of the annual meetings of the International \u200bMonetary Fund and World Bank in Bangkok.<\/p>\n
“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 \u200bwe forecast, then it will be easy to implement.”<\/p>\n
The country now expects oil prices to average around $90 per barrel by \u200bthe end of the year, higher than the reference price of $61 it used in its 2026 budget.<\/p>\n
Although the government has yet to submit its \u200c2027 \u2060budget, 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.<\/p>\n
The government expects crude production to come in at 1.045 million barrels per day in 2027, matching this year’s output.<\/p>\n
DIVERSIFYING FUNDING NEEDS<\/strong><\/p>\n Angola’s $4 billion Eurobond issuance and other liability operations have covered the “majority” of the country’s funding \u200bneeds this year, dos Santos said, \u200bwith any plans for \u2060further bond issuances or external financing dependent on the 2027 budget.<\/p>\n