The looming decline in global oil prices is poised to exert significant economic strain on Angola, according to its finance minister, Vera Daves de Sousa. Speaking to Reuters on the sidelines of the IMF and World Bank annual meetings in Washington, Daves de Sousa underscored the fiscal impact of falling oil revenues, estimating that prices may average between $70 and $72 per barrel next year—a notable decline from this year’s anticipated $75 per barrel.
With Angola being Africa’s second-largest exporter of crude oil, the anticipated decrease in oil prices presents a particularly formidable challenge to the nation’s economy, which is heavily reliant on hydrocarbon exports. “This trend puts lots of pressure on us,” Daves de Sousa commented, adding that recent geopolitical factors, alongside an ample global oil supply and weak demand, suggest the price outlook may remain underwhelming. Friday’s Brent crude futures, a benchmark for global oil prices, closed at $76.05 a barrel, rising by 2.25%. Nevertheless, the forward outlook appears subdued, with analysts forecasting further price drops in 2025.
The Angolan government, in response, has outlined plans to phase out its extensive fuel subsidy programme, a measure that has weighed heavily on public finances, consuming approximately 4% of GDP this year. Though Daves de Sousa did not specify a timeline for the removal of subsidies, she confirmed that the government intends to implement a gradual, phased approach. “How many steps we haven’t decided yet, but our idea is to do it in steps,” she clarified.
Angola’s recent departure from the Organisation of the Petroleum Exporting Countries (OPEC) earlier this year signals a strategic pivot as the country seeks greater flexibility in managing its domestic energy and economic policies. While OPEC membership has traditionally enabled Angola to play a role in influencing global oil prices, its exit could suggest a recalibration of priorities towards more agile fiscal policy management, especially as the country contends with pressures to diversify its economic base.
Analysts warn that the combined effect of declining oil prices and subsidy phase-outs may compound fiscal constraints in the short term. For Angola, the stakes are high: oil accounts for over 90% of the country’s export revenue, underscoring a critical vulnerability as global oil dynamics shift. The country’s ambitious plans for subsidy removal also come at a sensitive juncture, with inflationary pressures and exchange rate volatility impacting the Angolan economy.
Meanwhile, Angola’s leadership has been fortifying its international partnerships to cushion these impacts. The ongoing IMF and World Bank meetings in Washington offer Angola an opportunity to reinforce alliances with international financial institutions, while also seeking support for economic reforms aimed at fostering sustainable development.
The path forward remains complex for Angola, as it balances its domestic policy needs with the volatility of the global oil market. However, Daves de Sousa’s cautious approach to subsidy reduction highlights a pragmatic stance, seeking to preserve fiscal stability without triggering abrupt economic dislocations. For now, Angola’s oil-dependent economy remains deeply susceptible to the oscillations of the global market—a reality unlikely to change in the immediate future.
