"The Government's political agenda, which aimed to reduce Angola's dependence on oil through investments in the non-oil economy, came up against an obstacle, as low oil prices cut revenues and will reduce economic activity in 2020 and 2021," he said. Nathan Hayes, speaking to Lusa in the week that marks the 45th anniversary of Angola's independence.
"The Government continues to take steps in this direction, but progress will be difficult with the economy in recession and tax revenues at low levels, so from 2022 we hope that diversification will resume, with reforms bearing fruit and a policy more encouraging monetary policy for new investments, "added the British analyst.
For the expert of the economic analysis unit of the British magazine The Economist, "João Lourenço showed an appetite for sweeping changes through initiatives to improve transparency in public procurement, to print fiscal consolidation and to reform the banking sector".
The problem, he points out, is that "progress in these areas will be difficult to maintain in 2021 with the economy in recession and tax revenues falling", so the analyst estimates that "when oil prices recover, in 2022, activity non-oil economy and investor confidence will improve, restarting progress in diversification and attracting foreign direct investment, which could reverse a long period of net capital outflow ".
The EIU forecasts point to a recession not only this year, but also in 2021, following a fall in oil production that has been occurring since 2008, with oil wells reaching maturity and a lack of new investments.
"Oil production will continue to fall due to limited investments in wells in recent years, in a context of cost reduction by oil companies due to falling prices", points out Nathan Hayes, expecting a resurgence of economic activity in the diamond sectors, agriculture and mines.
"The ongoing reforms to attract investment and reduce cronyism are encouraging, but the gains in terms of GDP will imply more efforts against corruption, poor regulation and the withdrawal of private investments due to the weight of the public sector", warns the analyst , highlighting the challenge to the Government and the "lack of real improvements in people's living standards", which was exacerbated by the pandemic, whose recovery will take years.
Asked if the Government of Angola is, this time, really committed to economic diversification, Nathan Hayes replied that "structural reform as an integral part of the International Monetary Fund (IMF) program to generate more transparency has long been hampered by the control of economy by the political elite "and concluded that" reforms are being fought by hidden interests "in the country.
