Rescuing the Angolan Economy
President José Eduardo dos Santos admits Angola is running out of money but he has yet to outline any sort of rescue plan. Is Angola teetering on the precipice of economic disaster? Or is it already in the abyss?
In spite of international entreaties to diversify the economy and reduce its dependence on imports, the MPLA government has so far failed to make meaningful changes to ensure self-sufficiency. So if the national bank has run out of money to pay for imported goods, what is the alternative?
How can the government guarantee a continued supply of food to the Angolan people? Are they to starve? Can the President tell us where he expects to find the resources to avert calamity?
With Angola already having to service billion dollar loans, the President may have run out of collateral. Clearly his generation of governing officials won’t have to bear the burden of having to repay these loans, that will be the sorry legacy they leave to their children and grandchildren. But if Angola’s borrowing options are limited, where can the President turn to find the money?
How fortunate then that the Angolan leadership, with significant public backing, established the Sovereign Wealth Fund as a buffer against economic crises. This was such a good idea that other governments followed suit: investing the budget surplus from the good years for capital growth to protect the national economy against any hard times in future. Who would have predicted that a crisis of such magnitude would be upon us so soon?
Has the government overlooked this potential solution to the cash shortfall brought about by plummeting oil prices? Unless the President has a better plan up his sleeve, what is to prevent him from drawing down funds from the Sovereign Wealth Fund?
Some may argue that this is not the best time to sell Angola’s holdings in the fund and that a delay of a year or more could secure a better return. Are these the same ‘experts’ who prepared budgets last year based on the assumption that oil prices would remain steady at more than US $100 a barrel? Can Angola afford to hold on? Surely not if the price would be mass starvation.
Unless Angola secures an immediate alternative source of revenue to fund its import dependency, or conjures up at short notice sufficient diversification to ensure the country can feed itself, then the future could be very bleak indeed. But if the Sovereign Wealth Fund has been well managed by the President’s son, José Filomeno dos Santos “Zenú”, and if the government is prepared to draw down funds to import food rather than weapons, the solution may be at hand. And then what?