Angola backs budget, may cut spending if oil stays low

Angola, which rivals Nigeria as sub-Saharan Africa’s biggest oil producer, approved a $42-billion spending plan for 2009 despite fears the recent slump in oil prices will increase the country’s budget deficit.

The ruling MPLA party used its over two-thirds majority in parliament to approve the 2009 budget on Friday, but said it would be open to revise spending if the price of oil failed to recover from recent lows.

”If there isn’t a quick turnaround to this crisis there is the possibility of revising the budget for 2009,” said Prime Minister Paulo Kassoma, before the vote was approved by 170 of the 220 members of Parliament.

”The government will carry out measures to ensure public spending remains sustainable and rational,” he said, adding that there should also be a joint-effort to stave-off falling crude oil prices.

Angola, dependent on oil for 90% of its income, plans to increase spending by 43% to $42-billion next year, with the budget deficit reaching 7,7% of gross domestic product.

The government calculated the budget based on an oil price of $55 per barrel, but the price has plunged by more than two thirds since hitting a record above $147 a barrel in July, and was trading around $45,14 on Friday.

Diogenes de Oliveira, head of the economy and finance commission, told Angola’s Parliament the drop in oil prices could hamper the nation’s spending plan for 2009, mostly aimed at diversifying the economy beyond the oil sector and improving the lives of Angolans.

”The government must closely monitor the oil market and immediately evaluate the need to review its budget for 2009,” Oliveira said. He was speaking before a parliamentary vote on the country’s 2009 budget.

Oil Minister, Botelho de Vasconcelos, echoed similar concerns earlier this week and called on his government to seek ways to counter falling revenues from the oil sector.

The drop in oil prices prompted Opec to cut production by 1,5-million barrels per day in November and more cuts are expected to be announced at a December 17 meeting in Algeria.

The government expects the south-western African nation’s economy, which has been growing in double digits since the end of a civil war in 2002, to expand by 15% in 2008 and 11,8% next year, on the back of growth in the non-oil sector. – Reuters

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Henrique Almeida
Educador Físico, amante de livros de ficção e fantasia, filmes e boardgames, teimoso de nascença

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