Angolan Government cuts spending by 50% as oil revenue plunges

The government of Angola, sub-Saharan Africa’s second-largest crude producer, cut spending by half this year following a plunge in oil prices, Vice President Manuel Vicente said.

Public investment was reduced by 53 percent, Vicente told lawmakers in a state-of-the-nation address on Thursday in the capital, Luanda.

He delivered the speech in the absence of President Jose Eduardo dos Santos, 73, who was “indisposed,” according to parliamentary Speaker Fernando da Piedade Dias dos Santos.

Oil accounts for about two-thirds of fiscal revenue in Angola, putting the nation at risk after crude prices more than halved since June last year. The central bank devalued the currency twice this year and raised the benchmark interest rate four times in response, while the government has sought funding from the World Bank and China to help cushion the economy.

“We have had a contractionary fiscal policy, which has been guided by an amending of the state budget, embodied in a reduction of spending and more cautious revenue management,” Vicente said. “All this was possible thanks to the intervention of monetary policy and the injection of resources to cope with the current situation.”

The economy will probably avoid recession and expand 4 percent in 2015, he said. Debt is estimated to reach 45.8 percent of gross domestic product, he said.

“At this time, the macroeconomic indicators show us some stability and more encouraging prospects for the future, although they require a continuation of work that has been done so far,” Vicente said.

The kwanza has slumped 24 percent against the dollar this year and was trading at 135.305 on the interbank market as of 1:30 p.m. in Luanda.