Angola Affirms Full Commitment to Combat Stubborn Inflation

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Angola’s Finance Minister, Vera Daves de Sousa, declares the central bank’s unwavering dedication to curbing persistently high inflation. The government is intensifying efforts to boost local production, aiming to reduce dependence on imports. Angola, a net importer, witnessed a surge in the annual inflation rate, reaching a 17-month high of 20% in December, up from 18.2% the previous month.

To address inflationary pressures, Angola’s central bank increased its key interest rate by one percentage point to 18% in November, marking the first rate hike in over two years. Finance Minister Daves de Sousa emphasizes the central bank’s commitment, citing actions to manage liquidity and modestly raise interest rates. The government is also contributing to the effort with structural measures focused on economic diversification.

Last year, inflationary challenges heightened as the government briefly ceased defending the kwanza in May and reduced gasoline subsidies a month later. These measures nearly doubled pump prices, previously among the cheapest globally. The kwanza depreciated by approximately 39% against the dollar over the past 12 months.

Unofficial estimates, cited by the Famine Early Warning Systems Network, suggest that actual inflation in Angola exceeds 30%. Finance Minister Daves de Sousa expects to assess the inflation trend in the first quarter to gauge when relief may occur.

Responding to Angola’s economic outlook, Daves de Sousa maintains a growth forecast of 2.8% for 2024, driven primarily by the non-oil sector. The government is investing in industries like agriculture to stimulate local production. Additionally, she underscores the need to increase oil production, which constitutes over 90% of the country’s exports. Defending Angola’s exit from the Organization of the Petroleum Exporting Countries (OPEC) in 2023, she asserts the decision provides flexibility to capitalize on oil sector investments amid ongoing diversification efforts.