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Tue, 19 Nov 2019 19:21 - Updated Tue, 19 Nov 2019 19:21

Stabilization program with positive budget balance

Luanda - Angola recorded, for the first time in four years, a positive budget balance of 2.2 percent of Gross Domestic Product in 2018, as a result of the Macroeconomic Stabilization Program implemented since January last year, said on Tuesday the State Minister for Economic Coordination, Manuel Nunes Júnior.

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State minister for Economc Coordination, Manuel José Nunes Júnior

Photo: Pedro Parente

While presenting to Parliament the message from the President of the Republic about the macroeconomic outlook of the State Budget2020, Manuel Nunes Júnior reported that preliminary data point to an equally positive budget balance of 1.3 per cent in the first half of 2019.

The proposed budget for 2020 also foresees a budget surplus of 1.2 per cent of GDP.

According to the governor, the exit from a deficit to surplus budget situation is a huge one, as this means that the country will have less need for debt and can escape from a real debt trap.

He added that this factor also has positive implications for lower interest rates, as the higher the country's debt and financing needs, the higher the interest rates demanded by the market.

The official recalled that the economic and financial crisis that began in 2014 resulted in a drastic reduction in state revenues, and spending did not reduce to the same extent as revenue, resulting in an accumulation of budget deficits.

He added that in 2014 the deficit was 5.7 per cent of GDP, 3.8 per cent in 2016 and 6.3 per cent in 2017, all of these deficits were financed by rising state debt, with the government debt-to-GDP ratio from 30 percent in 2013 to about 90 percent today.

The government official said that the Government's efforts are to put the debt-to-GDP ratio at around 60 percent by 2022.

The government reiterates that it has no doubt that in order to solve the great social problems of the country, with particular emphasis on unemployment it has to come out of the economic recession in which the country finds itself.

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