Thursday, August 25, 2011

Angola Economic Growth to Jump to 8% in 2012 on Oil Boost, World Bank Says

Economic growth in Angola, sub- Saharan African second-biggest oil producer, will probably accelerate to 8 percent next year due to higheroil prices and increased spending, World Bank economist Ricardo Gazel said.

The southern African nation’s economy may expand 5 percent this year, Gazel said in a telephone interview yesterday from Maputo,Mozambique’s capital. Gazel is the Washington-based institution’s economist for Angola and Mozambique.

“The economic growth prospects for Angola are solid,” he said.

A recovery in oil prices has boosted Angola’s economy after a drop in 2009 depleted its foreign-currency reserves, leading the government to cut spending and postpone repayment of $6.8 billion in arrears to construction companies that helped rebuild infrastructure after the end of a civil war in 2002. Brent crude has surged 18 percent this year, according to data compiled by Bloomberg.

Oil accounts for about 50 percent of Angola’s gross domestic product, 80 percent of government revenue and more than 90 percent of exports earnings, according to Gazel.

“Today, Angola is in a completely different position and is set to resume investments in the non-oil sector that will further stimulate economic growth,” Gazel said. Lower oil production due to maintenance work this year should be “more than compensated” by higher oil prices, he said.

State spending will probably also increase ahead of elections due in 2012, helping boost growth, excluding oil, expanding by about 10 percent this year, Gazel said.

Budget Surplus

Standard & Poor’s raised the country’s sovereign-debt rating to BB- last month, three levels below the agency’s lowest investment-grade rating, citing its improved state revenue and current-account balance. Moody’s Investors Service and Fitch have also upgraded their credit ratings for Angola this year.

Angola’s budget surplus will probably amount to about 8 percent of GDP this year while reserves have risen to more than $20 billion, making it easier to repay remaining debt to builders and reducing the need for a planned international bond, Gazel said. Reserves declined at about $12 billion in 2010, according to the country’s central bank.

“Angola has no need to issue a Eurobond as it has enough funds to carry out the investments needed in the economy,” he said.

Angola delayed issuing its first global bond, planned for September, because it doesn’t have “difficulties in its treasury,” Carlos Feijo, the country’s minister of state, said July 27. The country plans to settle the outstanding debt of $2.7 billion owed to builders within a year, according to Carlos Alberto Lopes, the finance minister.

Angola’s economy will expand by more than 10 percent next year after growing 3.4 percent in 2011, President Jose Eduardo dos Santos said July 13.

By Henrique Almeida - Aug 25, 2011 4:19 PM GMT+0200

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