Economic Overview

Over the past year, the Angolan economy has shown signs of slowing down. Gross domestic product (GDP) growth slowed to 3% in 2015 and is on a 1% trajectory in 2016. Annual inflation reached 35.3% in July and keeps accelerating, reflecting the 40%depreciation of the kwanza against the dollar since September 2014, and loose monetary conditions.

In September 2016, the budget was adjusted to account for lower revenue and to sustain growth. Investment spending was increased by 16%, resulting in an increase in the fiscal deficit (6.8% of GDP vs 5.5% initially). The revision had a negative impact on social sector expenditure which were reduced by about 8%. Total public debt – including quasi-fiscal liabilities ‘parked’ in Sonangol, has probably reached 75% of GDP, and debt service has increased to 15% of current expenditure.

Diamond production, the country’s second largest export, grew swiftly until 2006, when production volume reached 9.2 million carats. Since then, production has fluctuated between 8.2 and 9.2 million carats, growing by 4%, reaching 9 million carats. The country has still high potential to expand mining, since only 40% of the Angolan mining resources are known. Diamond exploration is being conducted in 13 provinces and 108 new projects are available for private investors.

Oil exports in the last 10 years accounted on average for 97% of Angolan exports. In 2014 and in 2015, the share of oil in total export remained around the same level. Oil exports brought in $60.2 billion in revenues to the country in 2014. In 2015, foreign currency inflow generated by oil exports was at $33.4 billion, a 44.5% decline in relation to the same period the previous year.

Inflation has accelerated to 31.8% (y-o-y) in June and is currently at its highest level since 2004.  It is also the highest in Southern Africa, exceeding by more than 10 points the levels of Malawi, Zambia and Mozambique. This contrasts with an assumption of 11%in the initial 2016 budget.

With lower revenues expected in the face of an 8% increase in public expenditure (led by capital and social expenditures), the fiscal deficit is expected to widen to 6.8%, from 5.5% in the initial budget, the additional deficit to be financed mainly through domestic borrowing. Public debt has reached $48 billion, with $4.4 billion being due within the next 12 months. The reported debt is slightly below the limit of 60% of GDP set by the public debt law. This figure is however conservative since it does not include the debt from Sonangol and payments arrears with suppliers that have not be fully recognized by the Debt Management Office (DMO).

Political Context

Angola has maintained political stability since the end of the civil war in 2002. In February 2010, the Constitution established a presidential parliamentary system. Under the new system, the president is no longer elected by direct popular vote, but instead the head of the party winning the most seats in Parliament becomes president. The 2010 Constitution sets a limit of two, five-year presidential terms.

On September 5th, 2016, President dos Santos reshuffled the government.

Parliamentary elections were held under the new Constitution in August 2012. The ruling party Movimento Popular de Libertação de Angola (MPLA) won 175 out of 220 seats in 2012, receiving over 72% of the votes. As a result, the incumbent Jose Eduardo dos Santos was sworn in as President. União Nacional para a Independência Total de Angola (UNITA) is the main opposition party with 32 parliamentary seats, while Convergência Ampla de Salvação de Angola (CASA-CE), established  six months before the elections, and Partido de Renovação Social (PRS) won eight and three seats respectively. The next legislative elections are scheduled to take place in 2017.

Development Challenges

Development challenges include reducing the dependency on oil and diversifying the economy, rebuilding its infrastructure, improving institutional capacity, governance, public financial management systems, human development indicators and the living conditions of the population. Large pockets of the population still remain in poverty and without adequate access to basic services and could benefit from more inclusive development policies.

Last Updated: Oct 17, 2016

World Bank Group Commitment to Angola

World Bank Group (WBG) activities in Angola are undertaken within the context of the Country Partnership Strategy (CPS) for 2014-2016.  The overarching strategy of the CPS is the promotion of more inclusive development, and it consists of two core objectives constituting pillars, and one foundation plank possessing a cross-cutting nature. The pillars and foundation are as follows:

  • Pillar I focuses on supporting integrated national economic diversification by revitalizing rural economies to create greater competitiveness and employment. The focus is on the strengthening of the non-oil economy, with an emphasis on rehabilitating traditional lines of business that suffered greatly during the war, as well as technical assistance for the energy sector.
  • Pillar II focuses on enhancing the quality of service delivery and instituting a strong social protection program to improve the quality of life of the population and equip them to take a greater role in the development of the country.
  • The Foundation Plank of the CPS revolves around building human and institutional capacity to approach the levels common in middle-income countries, complementing the two strategic pillars.

These objectives will be achieved during the CPS period through stronger attention to quality and implementation of the five existing International Development Association (IDA) projects as well as through new International Bank for Reconstruction and Development (IBRD) lending, and the expected build-up of a series of Reimbursable Advisory Services (RAS).

Angola is an IBRD country and received no allocation under IDA17. Its current IBRD exposure limit is $1,209 m.

The portfolio consists of six projects with a total commitment of $924.5 million of which $226.5 million are undisbursed (five IDA IPF $404.5 million and one first IBRD DPL operation of $450 million).

Last Updated: Oct 17, 2016

The World Bank has successfully contributed to Angola’s development, by providing support in the following areas:

Improved Service Delivery to the Poor

The Angola Social Action Fund, commonly known as “Fundo de Apoio Social” (FAS) has been the main WBG support program that contributes to forwarding decentralization. The project, which has improved poor communities’ access to basic social and economic infrastructure and provision of services, has been in implementation in various phases since 1994. The project, now called the Local Development Project (PDL) is in its fourth phase, and has been considered as the largest bottom-up poverty reduction program in Angola. It provides direct financial support and capacity development assistance to poor communities complementing the government’s efforts in the decentralization processes.

During the third phase of the project, 1,575 pieces of community infrastructure were constructed and rehabilitated in all 18 provinces of the country enabling about 2.3 million Angolans to gain access to basic social and economic services. Mechanisms and practices for participatory governance systems have been established, in which local governments are increasingly more accountable to their constituencies and about 7,200 individuals benefited from its capacity development activities, half of whom (3,108) received formal training.

Strengthening Public Sector Management

To support the government’s efforts to improve macroeconomic stability, the WBG financed the Economic Management and Technical Assistance (EMTA) project. The main objective of the project was to assist the government in the establishment of a more transparent and efficient public finance framework. Major results included the modernization of payment systems, such as the Real Time Gross Settlement (RTGS) availability which is now above 99% with a continued increase in number of transactions and amounts. Increased retail services as the number of cards, Automated Teller Machines (ATMs) and Point of Sales (POS) grew: 685,000 cards; 486 ATMs, 850 POS. The RTGS system is facilitating a large value inter-bank payment and settlement in real time online mode on a transaction by transaction basis.

Last Updated: Oct 17, 2016

The WBG continues to leverage its support by working closely with other key stakeholders. This entails closer collaboration with other development partners, the private sector, civil society organizations (CSOs), academia, and think tanks. Some of the institution’s traditional partners include UN agencies (UNDP, UNICEF), the European Commission, USAID as well as the oil sector companies on innovative cooperation opportunities.

Last Updated: Oct 17, 2016


Angola: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments