BFA expects Angola to grow up to four percent this year

The economic studies office of Banco Fomento Angola (BFA) considers that the Angolan economy could grow by up to four percent this year, warning, however, of the dangers of an expansionist policy in an election year.

"For the economy as a whole, the Ministry of Finance predicts growth of 2.4 percent, while we expect an increase in economic activity between 3.5 and 4.0 percent", reads an analysis of the Budget. of the state this year.

In the analysis sent to customers, which Lusa had access to, BFA analysts point out that "the budget is expansionary to try to encourage the economy", but warn that "the most worrying sign regarding expenditure comes from the large increase in spending on General expenses".

These are, they add, "expenditures that, for the most part, do not seem to be allocated to specific programs; in this sense, it becomes more difficult to monitor them, and the State's planning itself" in a year that will be marked by the elections , scheduled for the end of August.

In the document, the analysts point out that, as usual, the forecast for the price of a barrel is conservative not only in terms of history, but also in terms of international forecasts and the current price, above 80 dollars per barrel; thus, while BFA forecasts the price of each barrel at US$72, Luanda estimates a price of US$59, which is 19 percent below the average forecast by analysts, says BFA.

BFA, which anticipates that Angola will have ended 2021 with growth of 1 to 1.5 percent, coming out of recession, states that despite the conservatism in some forecasts, the Budget "is a clear application of expansionary fiscal policy, to try to encourage the economy (although the movement in this direction is slight), which can be seen by the movement of the non-oil Primary Balance, which worsens from -4.5 percent to -5.7 percent in the Government's expectations", which compares with the forecast of -6.2 percent of the bank's analysts.

For BFA, the main elements of the expansionist policy in an election year "are the decrease in VAT for a series of food items, the increase in expenditure on current transfers (especially subsidies) and the increase in spending on goods and services".

The 2022 Budget Law proposal was approved on 14 December with 135 votes in favor of the Popular Movement for the Liberation of Angola (MPLA), 53 votes against by the National Union for the Total Independence of Angola (UNITA), by the Broad Convergence of Salvation. of Angola – Electoral Coalition (CASA-CE) and independent deputies and three abstentions from the National Front for the Liberation of Angola (FNLA) and the Social Renewal Party (PRS).