Oil price war could create decline in Angola’s economy

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petroleum revenue
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The oil price war together with COVID-19 outbreak is affecting Angola, Angolan economist Carlos Rosado de Carvalho said in an interview to Xinhua.

COVID-19 is reducing the economic activity worldwide, affecting practically all sectors, according to Carlos Rosado.

The specialist reinforced that “when there is less economic activity, there is also less need for oil and demand is reduced.” This also compromises the sale of the crude on the international market.

The main impact on the Angolan economy, said the expert, was the reduction in the price of oil, since Angola is a country dependent on oil in more than 90 percent of exports.

“Oil is the biggest source of revenue for the Angolan State, and if the State is going to have less revenue, it means that it will invest less, that way the economy ends up suffering,” he stated.

For the economist, taking into account that Angola is already going through a difficult phase, the actual moment complicates further the situation.

The economist said, “We hope that it will be a temporary situation and that in a short time, we will be able to be more optimistic about the future of Angola, Africa and the world in general.”

However, he said that there is still a lot of uncertainty as to what will be done, as some people advocate for example the review of the General State Budget, taking into account that the base of the budget is the price of the crude.

He added that if oil prices continue falling as they are, it will even be necessary to restructure the debt, aiming at macroeconomic stabilization.

Also if the oil prices continue going down and this year’s budget is not enforceable Angola will not be able to settle the debts, thus getting into default.

Carlos Rosado de Carvalho is currently the editorial director of the newspaper specialized in economics EXPANSAO and professor at the Catholic University of Angola. Enditem

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