09 February 2015 – Angola’s cabinet has cut proposed 2015 budget spending by 1.8 trillion kwanza ($17 billion) to 5.4 trillion kwanza after slashing expected oil revenues, according to reports.
The revised budget figures, based on an oil price of $40 per barrel rather than the $81 previously forecast, will need to be approved by parliament, which should be a formality given the ruling party’s large majority, the Angola News Agency (ANGOP) reported on Friday.
The revised plan forecasts a budget deficit of 7% of GDP, a shortfall that could be partially covered by Angola’s $26 billion in foreign exchange reserves.
Planning Minister Job Graca told ANGOP he expects the economy to grow 6.6% this year with the oil sector expanding 9.8% while inflation should average 7%-9%.
Some economist think Angola is being too optimistic and project economic growth closer to 3%, down from 4% last year and a peak of 12% in 2012.
Oil accounts for about half of Angola’s GDP, 80% of tax revenues and 90% of export earnings.
An almost halving of oil prices in the last six months will result in a current account deficit of 19% of GDP, the first time Angola has posted a deficit since 2009, the central bank said.