For two years now, the average price of a barrel of Brent oil has varied around 80/70 dollars, with some upward trend, even surpassing the USD 120 barrier, but without ensuring budgetary stability in the last two years, with the debt the solution
Cuts in global production and the inability of some countries to produce the quota reserved for them by OPEC are seen as some of the reasons for the “stability” of oil prices in the international market, which continues to receive oil production from Russia through other sources. countries.
The scenario is good for Angola, but not that much, as the surplus is fundamentally used to pay creditors.
In May 2022, a barrel of oil was sold for USD 125, at a time when there was already a war in Ukraine, imposed by Russia, which would be sanctioned but without the great impact desired by the allies (European Union and the United States) , and also for Angola, which is currently seeking solutions for its macroeconomic stability.
The rise in the price of oil (with an average price of USD 70) in the last two years raised hopes for Angola, but soon, the Minister of Finance, Vera Daves de Sousa, tried to explain that the reflection of the rise in price of oil compared to what was foreseen in the OGE does not have immediate effects, in addition to the Debt Service which has a high burden on the State coffers.
The budget cuts in the initial schedules for 2024 of some provincial governments, ministries and other budgeted units are the result of the “little power” that oil has to support expenses, as there are high commitments with creditors to be honored.
In his analysis on the topic, the economist and university professor, Paulo dos Santos, begins by saying that “the world market is witnessing a rise in the prices of goods and services, including the main commodities, as a result of the war in Europe, and the instability in other parts of the world, eroding the power of Kwanza”, he said.
Remember that Angola’s economy depends essentially on oil exports, and the increase in this raw material created a budget surplus that nominally benefited our economy and served to finance some OGE items, especially the payment of debts.
He reinforces, but with caution, that following two years of war in Europe, the oil market adjusted to the new reality, and the price of this commodity fell, but remained above the OGE forecast. For Paulo dos Santos, it happens that Angola exports crude oil, but the lives of its citizens depend on imports of the goods and services consumed.
Thus, the need for systematic imports attracts inflation to the country from the industrialized countries that produce the goods consumed in Angola, diluting the gains brought by the rise in oil prices.
“This means that the price of crude oil on the world market has stabilized at around 77 USD, above the 65 USD forecast in Angola’s OGE for the current year, representing a surplus of 17%.
However, since last year there has been an inflation of the Kwanza once morest the dollar of around 24%, well above the gains obtained with the current price of oil, which creates a deficit in the OGE”, explained the academic.
He emphasizes that the scenario is worsened by consumer prices, which last year rose 18% compared to the same period last year, removing great purchasing power from the market.
He highlights that “in these circumstances, the Executive becomes hostage to the dynamics of the world market in terms of stabilizing the Kwanza and market prices, as well as with regards to the implementation of various economic projects such as the diversification of the economy that has helped to sustain the internal market, the construction of economic infrastructures such as refineries, or helping the social sector that is facing difficulties due to a lack of financing”, he listed.
