Country Report Angola January 2009

Outlook for 2009-10

• The ruling party, Movimento Popular de Libertacao de Angola (MPLA), has cemented its political hegemony following its resounding victory in the legislative election in September 2008, securing 81.6% of the national vote.
• The Angolan president, Jose Eduardo dos Santos, is likely to stand as the MPLA's candidate in the presidential election, which is expected to take place in late 2009, to be followed by mooted municipal elections.
• The main opposition party, Uniao Nacional para a Independencia Total de Angola (UNITA), will struggle to redefine itself after securing just 10.4% of the national vote in the legislative election.
• With oil production expected to fall in line with OPEC cuts, real GDP will contract in 2009, averaging -2.3%, before recovering modestly in 2010 to 6.2% in line with rising oil production.
• The high level of imports, coupled with the currency's expected depreciation, will keep inflation high, at an average of 11.4% in 2009 and 10.5% in 2010.
• The collapse in export revenue in 2009 will push the current account into a deficit of 3% of GDP, before a recovery in international oil prices and output restores the current account to a surplus of 4.8% of GDP in 2010.

Monthly review

• A 45-member Constitutional Commission has been created to draft a new constitution to be in introduced in 2009 after a public consultation.
• The drafting of the new constitution, and the wrangling over the detail of its content, could further delay the holding of the presidential election, which had been expected to take place in September 2009.
• Mr dos Santos has carried out a four-day visit to China aimed at cementing bilateral relations and shoring up Chinese financing.
• The government has admitted that it will have to revise substantially the ambitious spending plans outlined in the 2009 budget as a result of lower revenue due to falling international oil prices and OPEC production cuts.
• On January 1st Angola assumed the presidency of OPEC for a six-month period, the first time that Angola has occupied this role.
• Under the OPEC production cuts introduced in January, Angola has agreed to reduce output from 1.84m barrels/day (b/d) in January to 1.6m b/d by March.
• Angola's foreign-exchange reserves have started to fall for the first time in two years, dropping from a record of US$19.8bn in October to US$18.9bn in November as the central bank has drawn on them to support the currency.

Source: Country Report