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Finance minister says reduced oil prices pressuring Angola

Published

3 hours ago

October 26, 2024

Angola’s finance minister has told journalists that falling oil prices put “lots of pressure” on the nation, predicting that prices would average between $70 and $72 per barrel in 2024 as opposed to $75.

In an interview conducted on the fringes of the IMF and World Bank annual meetings in Washington, Finance Minister Vera Daves de Sousa stated that the government of the continent’s second-largest crude oil exporter will likewise keep phasing down fuel subsidies.

“How many steps we didn’t decide yet, but our idea is to do it in steps,” she said, confirming that subsidies were amounting to around 4% of GDP this year.

At the start of this year, Angola departed from the Organisation of the Petroleum Exporting Countries.

On Friday, Brent crude futures rose 2.25% to $76.05 a barrel. Analysts have cautioned that next year’s high supply and weak demand will put pressure on oil prices.

According to Daves de Sousa, the administration will submit its budget to Parliament the following week, and during the next few days, the numbers regarding the amount of outside funding that will be required will be finalised.

Angola is considering internally whether to apply for a loan program from the International Monetary Fund, she said.

“We asked for a note with options of programs in case we request, and considering our current situation, what they understand as a good program for us,” she said.

According to her, the administration was also looking at other options, such as combining funds from domestic banks and capital markets with support from other multilateral sources like the World Bank and the African Development Bank.

Angola’s most recent IMF program, worth $3.7 billion, was approved in December 2018 after the country’s earnings were severely damaged by the collapse of global petroleum prices.

Angola’s finance minister has told journalists that falling oil prices puts “lots of pressure” on the nation, predicting that prices would average between $70 and $72 per barrel in 2024 as opposed to $75.

“How many steps we didn’t decide yet, but our idea is to do it in steps,” she said, confirming that subsidies were amounting to around 4% of GDP this year.

At the start of this year, Angola departed from the Organisation of the Petroleum Exporting Countries.

On Friday, Brent crude futures rose 2.25% to $76.05 a barrel. Analysts have cautioned that next year’s high supply and weak demand will put pressure on oil prices.

Angola is considering internally whether to apply for a loan program from the International Monetary Fund, she said.

“We asked for a note with options of programs in case we request, and considering our current situation, what they understand as a good program for us,” she said.

Angola’s most recent IMF program, worth $3.7 billion, was approved in December 2018 after the country’s earnings were severely damaged by the collapse of global petroleum prices.

Related Topics:Angola Featured Finance Minister Oil Prices

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IMF recommends exporting African countries make crucial changes. Here’s why

Published

3 hours ago

October 26, 2024

Ifeoluwa Dada

Abebe Aemro Selassie, director of the International Monetary Fund (IMF) Africa, has stated that countries in Sub-Saharan Africa that rely on commodity exports must change their economies to address uneven regional economic growth.

According to the IMF’s most recent World Economic Outlook, which was released this week, the region is predicted to develop by 3.6% this year, which is unchanged from last year and lower than an April prediction of 3.8%. Commodity economies are likely to lag behind their more diverse rivals.

According to the IMF’s assessment, the growth of the commodity-intensive nations is around half that of the rest of the region, with oil exporters bearing the brunt of what it called “subdued and uneven” regional growth.

“South Sudan, Nigeria, Angola are all very much in that camp,” Abebe told Reuters.

The IMF’s regional economic outlook for Sub-Saharan Africa was released on Friday, and while diverse economies like Senegal and Tanzania are predicted to develop at a rate higher than the regional average, Nigeria would only grow at a rate of 2.9%.

“They have had very large macroeconomic imbalances, financing challenges which have held back growth,” Abebe said.

He claimed that because those issues had led to rising inflation and pressure on the expense of living, the Nigerian government needed to “squarely address” them.

The administration of President Bola Tinubu has started a number of measures that it claims are intended to boost economic expansion and draw in foreign investment. The IMF predicted that South Africa, whose growth has been hampered by debilitating power outages, would expand by 1.1% this year.

The IMF stated that armed conflicts are also impeding growth, pointing to the fact that South Sudan’s oil exports are impeded by fighting in neighbouring Sudan, where the crude export pipeline is located.

“They (oil exporters) need to find new sources of growth, get more private sector investment – so working on reforms that will facilitate that is important,” Abebe said.

According to the IMF research, Sub-Saharan Africa’s economic growth is anticipated to improve marginally to 4.2% in the upcoming year.

Although Sub-Saharan Africa accounted for almost half of the world’s 20 fastest-growing economies this year, the research issued a warning that greater growth rates were necessary to combat pervasive poverty and inequality.

According to the IMF, as nations grapple with high debt loads and high debt servicing costs, one of the primary barriers to higher growth is a lack of access to inexpensive financing.

The fresh money was expensive, even though some nations were able to sell bonds on global capital markets this year after a two-year break brought on by geopolitical shocks and high interest rates in developed nations like the US.

“The old development finance architecture is not delivering, and, if anything, kind of is in the process of disintegrating,” Abebe said, citing “very problematic levels” of official bilateral funding for poor countries.

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Nigeria considers US diaspora bond, seeks $1 billion monthly remittance

Published

1 day ago

October 25, 2024

Ifeoluwa Dada

Nigeria is aiming for remittance inflows of $1 billion per month and is thinking of issuing a diaspora bond in the US next year, the country’s central bank governor told Reuters on Thursday.

Since the present government started implementing extensive changes last year, Nigerians living overseas are eager to invest and have already more than doubled the amount of money they bring home, according to Central Bank Governor Olayemi Cardoso.

In an interview conducted on the fringes of IMF and World Bank meetings in Washington, D.C., Cardoso stated that a diaspora bond “could be on the horizon” in 2025 in the United States, which is home to the highest concentration of Nigerians living abroad.

“They want to invest … beyond just financially,” Cardoso said of Nigerians abroad.

“Our currency has now become extremely competitive and cheap. So they see the opportunity of taking positions in assets back home and in businesses back home.”

When President Bola Tinubu took over Africa’s oil-producing giant last year, he discovered a debilitating gasoline subsidy cost, a tightly controlled naira currency that was impeding investment, and a multi-billion dollar backlog of foreign exchange payments.

Cardoso was appointed by Tinubu in September 2023; Godwin Emefiele, his predecessor, is being tried for alleged corruption and criminal fraud.

With fuel prices five times higher and the naira worth only a fourth of what it was when Tinubu entered office, Cardoso said the bank’s attempts to win back investor confidence were succeeding. According to him, officials are aiming for $1 billion per month, and remittances reached $600 million in September from $250 million per month in the spring of this year.

“I would be surprised if we are not there by this time next year,” he said.

With reserves now worth over $40 billion, Cardoso stated that long-term attempts to diversify the economy away from oil could benefit from the weak naira.

“Now that our currency is relatively competitive … there should be the opportunity for those who have relied so much on importation to now beef up the productive activity that has so greatly eluded us over these years,” he said.

According to Cardoso, the bank will employ “vigilant” inflation monitoring and base interest rate choices on economic facts. He claimed that maintaining consistency in policy would attract longer-term foreign investment capital; investors were still evaluating the system at this point.

“Only time can show that you can stay the course,” he said.

Cardoso claimed that the government’s difficult decisions had received “an element of validation” from his talks with foreign Nigerians, investors, and rating agencies.

“It is necessary for people back home who have felt the brunt of a lot of these reforms to be able to … see that we are on the right course,” he said.