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Balance of payments with Usd 1.1 billion deficit

Tue, 08 Sep 2020 20:17 - Updated Tue, 08 Sep 2020 20:19

BNA headquarters in Luanda

Photo: Francisco Miúdo

Luanda - Angola?s balance of payments recorded in the first quarter of this year a Usd 1.1 billion deficit against the figures of the corresponding period of 2019 when it reached a surplus of Usd 1.7 billion.

The information is contained in the Angola Reserve Bank (BNA)’s Report on the Balance of Payment and International Payments Position that reached Angop.

According to the source, the net position of the international investment in the first quarter of 2020 remained in debt, thus aggravating its deficit balance to Usd 32.6 billion, against Usd the 31.3 billion in the fourth quarter of 2019.

The BNA note says that, despite showing a surplus, the current account balance has recorded a decrease from Usd 1.7 billion in the fourth quarter of 2019 to Usd 1.2 billion in the year in respect.

The figures represent a deterioration of 31.5%, with the current account to GDP ratio going from 9.6% to 6.8%, according to the report.

The BNA explains that the reduction in the current account balance is justified, essentially, by the poor performance of the main component of this account, that is, the goods account.

The revenues that the country collects with the export of goods, according to the report, continue to exceed the expenses with the import of goods, but the magnitude of this surplus recorded a significant contraction.

In the period under review, there was a deterioration in the balance of the goods account by approximately Usd 1.4 billion, corresponding to 26.8%, from Usd 5.5 billion in the fourth quarter of 2019 to Usd 4,0 billion in the first quarter of 2020, due to the drop in crude oil exports.

The reduction in total exports in the period under analysis is justified by the drop in the average price of crude oil.

The average price of Angolan crude rose from Usd 65.2 per barrel in the fourth quarter of 2019 to Usd 48.5 per barrel in the quarter under analysis, according to the document.

There was a slight reduction in the volume of crude oil exports from 119.7 million barrels to 118.8 million barrels.

The price effect had a negative impact of 97.2% on export earnings from crude oil, which went from Usd 7.8 billion in the fourth quarter of 2019 to Usd 5.7 billion in the period under review.

According to the document, the main destination for Angolan crude oil exports continues to be China, which remains in the lead with a share of around 66.9%, followed by India and Thailand with 7.8% and 6.2%, respectively.

Diamond exports also have a relative weight in the country's trade balance, with the United Arab Emirates continuing to lead the destination for diamond exports, with around 80.2% of the total value, followed by Belgium with 14, 3%.

Regarding imports of goods, in the first quarter of 2020 the total was Usd 2.4 billion, representing a decrease of 20.6%, compared to the fourth quarter of 2019, when imports reached Usd 3.0 billion.

Among other factors that justify this reduction, the exchange rate adjustment is one of the main factors, according to BNA.

The reduction in imports in the period in respect is observed in almost all categories of products, with a stress to food products and fuels that have a reduction of Usd 199.1 million and USD 106.3 million, respectively.

Imports of current consumer goods accounted for 62.4% of the import structure, while capital and intermediate consumption goods accounted for 24.1% and 13.6%, respectively.

The report also states that imports of current consumer goods, capital goods and intermediate consumption decreased by 21.4%, 21.3% and 15.7%, as compared to the previous quarter.

Regarding the origin of imports, Angola’s purchases in the first quarter of this year came from China (14.7%), Portugal (13.9%), the United States of America (6.0%), South Africa (5.9%) and the Republic of Korea (5.3%).

As for services, in the first quarter of 2020, the account showed a reduction in its deficit, from Usd 1,794.3 billion to Usd 1,5 billion in  comparison to the previous quarter, which represents a decrease of 14.6%.

The improvement in the balance of the services account in the first quarter of 2020 was influenced mainly by the decrease in expenses with the import of services, with an emphasis on construction by 49.8% (Usd 162.1 million), transportation services 22.1% (Usd 156.6 million) and other business services 21.2% (Usd 103.1 million).