According to a senior finance official, Angola may spend up to 3.8 trillion kwanzas (equivalent to $4.16 billion) on fuel subsidies this year. This amount is almost double the initial forecast, which was less than 2 trillion kwanzas ($2.19 billion).
This increase in spending highlights growing pressure on the state finances of the oil-producing country. The rise in global energy prices, driven by the ongoing conflict in the Middle East, increases the cost of maintaining low domestic fuel prices.
As a result, the growing volume of subsidies creates an additional burden on the government, prompting it to accelerate the gradual phasing out of subsidies—a process that began in 2023. Nevertheless, authorities are cautious about too rapid a transition due to potential economic and social consequences, as reported by Ottoniel dos Santos, Angola's Secretary of State for Finance and Treasury.
During annual meetings of the International Monetary Fund and the World Bank in Bangkok, dos Santos noted that Angola needs to combine subsidy reforms with measures to diversify its economy. He added that the government is adopting a gradual approach but could speed up this process if the impact on vulnerable populations proves less severe than expected.
Angola now expects the average oil price to reach around $90 per barrel by the end of the year, significantly higher than the $61 benchmark used in the 2026 budget. Although the government has not yet presented the 2027 budget, the submission deadline for which is at the end of the current month, dos Santos stated that the oil price assumption will generally align with the IMF's forecast of $71.50 per barrel. Furthermore, the government anticipates crude oil production to reach 1.045 million barrels per day in 2027, corresponding to the expected volume for the current year.