Country Report Angola July 2008

Outlook for 2008-09

• Following an announcement in December by the president, Jose Eduardo dos Santos, Angola’s long-delayed legislative election is scheduled to take place on September 5th-6th 2008, to be followed by the presidential election in 2009.
• Given the powers of incumbency, the Economist Intelligence Unit expects the Movimento Popular de Libertacao de Angola (MPLA) to win the legislative poll. We also expect Mr dos Santos to stand in, and win, the presidential poll.
• With oil production set to continue rising against a background of high oil prices, strong economic growth is set to continue over the forecast period, averaging 18.6% in 2008 and 9.1% in 2009.
• Sustained high government spending and buoyant domestic demand will keep inflation high, at an average of 12.3% in 2008 and 12.2% in 2009.
• The rapid increase in oil exports and high international prices are forecast to keep the current account heavily in surplus, rising to a peak of 63.5% of GDP in 2008, before falling moderately, to 44.8% of GDP, in 2009.

Monthly review

• The MPLA has announced that it will present a proposal to the National Assembly to extend voting in the September legislative election to two days, despite concerns that this could create opportunities to manipulate the results.
• The National Assembly has approved the creation of a constitutional court, Tribunal Constitucional, which has replaced the Supreme Court as Angola’s highest judicial body.
• The National Assembly has approved the revised 2008 budget, increasing expenditure from Kz2.245trn (US$29.7bn) to Kz2.268trn, to take account of costs relating to the election and a new salary scale for parliamentary deputies.
• The finance ministry’s 2007 budget execution report has indicated that just 65% of capital expenditure was executed, only marginally more than in 2006, reflecting administrative and infrastructural capacity constraints.
• The national oil company, Sonangol, has reportedly pre-qualified to bid for future oil and gas contracts in Iraq.
• According to a new cost of living survey, Luanda is the most expensive city in the world for expatriates, for the second year running.
• The government has announced a five-year plan to expand the Aldeia Nova agro-industrial project across the country, at a cost of US$400m.
• Construction work has started on a fourth cement factory in Lobito, which along with the three existing projects, should boost the country’s annual output by 5m tonnes by 2012.

Source: Country Report