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Eurasia: Angola only completely removes fuel subsidies in 2025

The consultancy Eurasia considered, this Wednesday, that Angola will only completely remove fuel subsidies after 2025, progressing slowly in this reform due to fears of protests, which requires further cuts in public spending.

: Lusa - Ampe Rogério
Lusa - Ampe Rogério  

"Subsidy reform will continue to move slowly; due to deteriorating economic conditions and greater pressures on the cost of living, authorities will likely adopt a more prudent timetable than initially announced, prioritizing price increases modest and gradual", write the consultancy's analysts.

In a comment on the progress of this reform, sent to clients and to which Lusa had access, analysts write that the caution with which the government views these changes "will probably push the reform calendar beyond 2025", with the Executive in power gasoline price increases will resume in the second half of this year.

Last week, President João Lourenço decreed that subsidies for gasoline used for regional travel and passenger transport would end on April 30, "which increases the risk of protests, especially in Luanda", analysts warn, adding, even so, that "widespread or prolonged protests remain unlikely".

For Eurasia, the government may resume gasoline price increases for all consumers from June, but progress on removing diesel subsidies, which was due to begin this year, could be delayed until 2025, and is likely to be dependent of measures to mitigate inflation and currency depreciation.

With the postponement, "public expenditure is expected to be greater than predicted in the 2024 Budget, so authorities will have to cut spending in other areas or improve tax collection to meet budget targets", write the analysts, concluding that "for Now, the Government should not seek a new program from the International Monetary Fund, but involvement and technical cooperation with the Fund will probably continue".

The President, João Lourenço, took another step in removing fuel subsidies by ending the exemptions granted to some professional classes from April 30th, according to a decree published in Diário da República.

The Government announced on June 1st last year, the gradual withdrawal of the fuel subsidy, which started with gasoline, but exempted some economic activities.

When the fuel reform, repeatedly defended by the IMF, was launched at the beginning of last year, Angola was the fourth country in the world where it is cheapest to fill a fuel tank.

State spending on fuel subsidies is expected to have fallen by 200 million euros last year, according to the 2024 Budget report, which predicts that in 2023 Angola will have spent around two billion euros on this item, a reduction of around 10 percent compared to the 2.2 billion euros spent in 2022.


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