The Angolan Economy: Growth Accelerates, Fiscal Pressures Persist

Angola’s 2027 budget proposal totals AKZ 37,337 billion and targets a fiscal deficit of –4.1% of GDP and a primary surplus of 0.5%, with revenues at 13.3% of GDP and expenditures at 17.4%. That is only a slight improvement on the –4.5% deficit now expected for 2026, when the oil windfall was more than absorbed by surging fuel subsidies, goods and services, and interest payments. The budget assumes a prudent oil price of US$71/bbl and crude output falling to 1.0 mbd, so oil revenues should drop back below 50% of total revenues, while interest payments become the largest expenditure item, absorbing 34.3% of revenues (25.4% in 2026). The government expects GDP growth of 5.5% in 2027, driven entirely by the non-oil sector (+7.2%), well above the 3.3% consensus of the IMF, World Bank and AfDB, with inflation easing to 7.3%. Our sensitivity analysis shows the deficit ranging from –2.3% to –6.0% of GDP depending on oil prices and production. With subsidy costs, election-year spending and a rising interest bill weighing on public finances, resuming fuel subsidy reform and broadening the non-oil tax base remain critical.

Tiago Bossa Dionísio

(+351) 964 643 530

tiago.dionisio@eaglestone.eu