"We anticipate that the Government of Angola will continue with its investment-friendly reform agenda in the coming quarters, ensuring policy continuity," the consultants say in an analysis of the economic and political situation.
In the analysis, sent to investors and to which Lusa had access, this consultant, owned by the same owners of the financial rating agency Fitch Ratings, writes that "the risks of social unrest will remain high in the short term, reflecting the growing popular discontent with the poor economic conditions.
Fitch's analysis, published at the end of the week when the International Monetary Fund approved the fourth review of the financial assistance program, releasing almost another $500 million, notes that the budget deficit is expected to have stood at 1.7 percent in 2020 and to improve to 0.4 percent in 2021, the year in which fuel subsidies are not to be removed.
"The subsidies, implemented through the oil company Sonangol, cost the government about $2 billion a year, and their elimination is one of the government's commitments under the IMF program," analysts acknowledge.
However, they argue that pressure from parliamentarians for subsidies to remain in place this year, and considering the 2022 elections, should result because "removing the subsidies will be politically unpleasant on the eve of the 2022 legislative elections.
Predicting 1.7 percent growth this year, Fitch Solutions notes that this is about half the population growth of 3.3 percent, "which means GDP per capital will continue to fall," impoverishing the country as a whole, and unemployment will remain at 35 percent, while inflation is expected to slow from 22.1 percent in 2020 to 18 percent this year.
About the 2022 elections, Fitch Solutions anticipates that the Popular Movement for the Liberation of Angola (MPLA) will win, but with less support than in 2017.
"The MPLA has already lost 25 seats in the 2017 elections, despite retaining a two-thirds majority in Parliament, and we hope that widespread social discontent and unpopular fiscal consolidation efforts will reduce the percentage of votes even further in 2022," but not enough for the party not to win the elections.
