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Mon, 15 Oct 2018 19:12 - Updated Mon, 15 Oct 2018 19:12

President predicts 1 percent fiscal deficit by 2019

Luanda - Angolan head of State João Lourenço Monday in Luanda predicted a fiscal deficit in the country equal to or less than one percent of GDP by 2019 and an increase in fiscal revenue of 9.8 percent.

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João Lourenço said that drop in deficit will imply less need for the State to get into debt, with positive effects in all economy, mainly related to the reduction of interest rates to be practiced in the domestic market.

Addressing the State of the Nation at Parliament building, to mark the opening ceremony of legislative year, the president recalled that in 2017 there was a deficit of 5.7 percent of GDP, against 3.4 percent in 2018 (below the amount provided for State Budget in execution).

The Angolan president said that inflation rates have been decreasing, adding that the difference between the official and unofficial exchange rate has also seen a remarkable fall.

As example, he said that in 2016 the cumulative annual rate of inflation was 42 percent. In 2017 it dropped to 23 percent. This year the country foresees less than 19 percent of a cumulative rate.

As for the foreign exchange market, João Lourenço said that the difference between the official and unofficial exchange rates stood at 150 percent in January this year.

But now, he said, based on the measures adopted and contained in the Macroeconomic Stabilisation Programme and Government Intermediate Plan , this difference stands at around 20 percent.

João Lourenço said that the execution of the plans and programmes is on track, adding that the results are encouraging, despite existing the negative effects of the crisis in the economy in 2014.

The head of State said that the Executive is working on creation of conditions for negotiating non-oil guaranteed financing, as happened with the issuance of Eurobonds and the financing that is being negotiated with the International Monetary Fund.

Based on approved programmes, such as the Programme to Support Production and Export Promotion (Prodesi), the president stated that the Government intends to improve the business environment and create conditions to produce a large part of the domestic goods, with stress to the increase of employment for young people.

As for the creation of a good business environment, João Lourenço proposed that national production be enhanced, with renowned companies.

He also defended commitment to the capital market and application of a balanced tax policy.

National Development programme and economic growth

On the other hand, João Lourenço said that the Angolan economy will have an annual average real growth of three percent over the next four years, based on the projections of the National Development Plan (2018-2022).

This growth will be driven by the non-oil sector, which will record annual average rates of 5.1 percent, according to him, an encouraging prospect, as the non-oil sector absorbs the most workforce.

In this period, he said, the oil sector will see a decline in production, with negative annual average rates of 1.8 percent. This fact will force the non-oil sector to report strong growth to offset this negative growth.

In the non-oil field, he pointed the sectors of agriculture with an average rate of 8.9 percent, fisheries 4.8, manufacturing industry 5.1, service 5.9, including tourism and construction 3.8 per cent, as growth engines.

Oil revenues

With regard to the difference of the value of the price of the barrel of oil planned in the State Budget and the price of the international market, João Lourenço underlined that in the first nine months of the year, the price of crude oil was above the projected in the budget of about 40 percent.

However, he said that oil production was below the  planned around 12 percent - from 1.7 million to 1.4 million barrels a day.

These variations, contrary to one another, in the increase in the price of crude, coupled with the reduction of production, led to a positive differential of USD 4 billion which enable to cover the domestic public debt.

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