Country Report Angola March 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 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 2010, to be followed by 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 is forecast to contract in 2009 by an average of 2.3%, before recovering modestly in 2010 to 6.4%, 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 11.3% in 2009 and 10.5% in 2010.
• The collapse in export revenue in 2009 will push the current account into a deficit of 3.5% of GDP, before a recovery in international oil prices and output restores the current account to a surplus of 1.6% of GDP in 2010.

Monthly review

• Reform of Angola's constitution has continued to advance slowly, with the head of the commission charged with drafting a new text indicating that the process could take at least six months to complete.
• It is increasingly likely that the presidential election, which had been anticipated for November 2009, will be delayed until 2010.
• The conclusion of the "Angolagate" trial in Paris has been delayed until late October, when verdicts against the 42 accused are expected.
• The cabinet has approved an action plan to address the impact of the global downturn on the Angolan economy, which is focused on cutting government expenditure and revising the programme of public investment.
• The Banco Nacional de Angola (BNA, the central bank) has denied that it is planning to devalue the kwanza, although its ability to keep supporting it has been undermined by the ongoing fall in foreign-exchange reserves.
• The government has concluded a new US$1bn credit line from the Chinese government and a potential US$1bn in loans from the World Bank to help to diversify the economy away from its dependence on oil and minerals.
• The government has drastically cut its forecast for real GDP growth to around 3% in 2009, although it has denied that the economy will go into recession.

Source: Country Report