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ANGOLA
Political Background
Economic and Social Analysis
Angola attained independence in 1975 from
Portugal through a war of self determination.
Agostino Neto leader of the Popular Movement for
the liberation of Angola (MPLA) formed a
transitional government but after independence in
November 1975, Angola faced a devastating civil
war which lasted for more than 25 years and claimed
millions of lives and refugees. Following
negotiations held in Portugal, under severe social
and political turmoil and uncertainty due to the April
1974 military coup, Angola's three main guerrilla
groups agreed to establish a transitional government
in January 1975. Within two months, however, the
National Liberation Front of Angola (FNLA),
MPLA and Uniao Nacional Pela Independecia Total
de Angola (UNITA), led by Jonas Savimbi were
fighting each other and the country during the civil
war was well on its way to being divided into zones
controlled by rival armed political groups. The
superpowers were quickly drawn into the conflict,
which became a flash point for the Cold War. The
United States supported the FNLA and UNITA.
The Soviet Union supported the MPLA. In 1992
elections were held and supervised by the United
Nations and were won by President Eduardo Dos
Santos of MPLA. Savimbi alleged fraud and
returned to war. Although the rebel movement
signed the Lusaka treaty in 1994, lasting peace was
not achieved and the political situation remained
unstable. Trade sanctions imposed on the UNITA
leadership by the United Nations have consistently
been violated by the illegal diamond trafficking,
providing funds for the rebels. On February 22 in
2002 while in combat with government troops Jonas
Savimbi was killed and a ceasefire was reached by the
two parties and UNITA assumed the role of a major
opposition party. A peace agreement was signed.
Under President Dos Santos leadership Angola
became a multiparty democracy and his MPLA won
a landslide victory in parliamentary elections held in
September 2008, the first polls to be held in the
country for 16 years.
Angola has one of the largest growth rates in the
world and is the third largest economy in Sub
Saharan Africa after Nigeria and South Africa. Oil
and gas contribute 56.8 % of the country's GDP,
agriculture 8% and manufacturing 4%. Angola is the
second largest producer of oil in Sub Saharan Africa
which accounts for 75% of its government revenue.
It is the fourth largest producer of rough diamonds
in the world. Much of the land is used for agriculture
though landmines pose a threat to farming resulting
in 3% of the land not being cultivated. Decades of
central planning, mismanagement, corruption and
the war had long distorted the economy. Angola is
striving to tackle the physical, social and political
legacy of the 27-year civil war that ravaged the
country after independence. In 2000, Angola began
tentative economic reforms. It has since made
significant progress in achieving macro-economic
stability and reducing inflation (from over 300% in
1999 to about 11.8% by the end of 2007.) Basically a
dollar economy, the government intervenes heavily
to support the national currency Kwanza. Angola
does not have any formal agreement with the IMF. It
has increasingly turned to oil-backed or commercial
loans to finance expenditure. High oil prices and
increased oil production have eliminated the
longstanding fiscal deficit and at least temporarily
reduced the need for external assistance or a formal
programme with the IMF. The government had
hoped for a Donors Conference to raise finance for
post-war reconstruction, but so far donors have
been reluctant to provide funds until transparency is
assured. Subsistence agriculture provides the main
livelihood for most of the people, but half of the
country's food must still be imported. Extensive
unemployment and underemployment rakes half of
the population in the country. In 2005, the
government started using a $2 billion line of credit,
since increased to $7 billion, from China to rebuild
Angola's public infrastructure, and several largescale projects were completed in 2006. Angola also
has large credit lines from Brazil, Portugal, Germany,
Spain, and the EU. Angola became a member of OPEC
in late 2006 and in late 2007 was assigned a production
quota of 1.9 million barrels a day, somewhat less than
the 2-2.5 million barrels Angola's government had
wanted. To fully take advantage of its rich national
resources - gold, diamonds, extensive forests, Atlantic
fisheries, and large oil deposits - Angola will need to
implement government reforms, increase transparency,
and reduce corruption. The World Bank/IFC's Doing
Business 2008 survey ranked Angola 167 of 178
countries in the overall ease of doing business.
Debt Analysis
Angola's external debt in 2008 was 7.4% of the GDP
while debt service used up 2.8% of exports. In 2007,
3.3% of the debt stock was owed to multilateral
creditors, 44.6% to bilateral creditors and 52.1% to
private creditors. Total debt outstanding was13.9%
GDP and debt servicing accounted to 8% of exports of
goods and services. The country's debt stock has
increased four fold from its 1980 levels. According to
the IMF, the external debt ratio for 2008 was 4.8% of
GDP. The debt burden of the country is illustrated by
high debt per capita figures. The debt to export ratio for
instance in 1998 was 236% of which according to the
IMF and World Bank was unsustainable. The effects of
the civil war have heavily influenced Angola's debt
position. The impact of hostilities on the economy and
the unpredictable political situation led to the massive
build up of unsustainable debt, and debt payment
account for a third of GNP. Debt servicing consumes
more than five times the combined spent on education
and health. In 2009 total debt servicing account to 2.8%
of GDP while the outstanding total debt is 11.9% of
GDP. The country has not been able to secure debt
relief from the Highly Indebted Poor Countries
initiative. Its debt service ratio in 2006 was
US$16,5million hence debt services are still using up
government revenue hence the need for debt relief.
Table 1: Economic and Social Indicators
1
Population
Spending on Health/GDP
4
Spending on Education/ GDP
1
Life expectancy
1
Debt Service to exports
1
External Debt/ GDP
1
GDP real Growth Rate
4
People with access to safe water
4
People living on less than $1
4
AFRODAD COUNTRY PROFILES - ANGOLA
17.5million (2008)
1.5 % (2005)
2.4 % (2005)
43years (2008)
2.8 % (2008)
7.4 % (2008)
15.8% (2008)
50% (2002)
68% (2006)
2
Table 2: Selected External Debt Indicators
Units
1990
1995
2000
2004
2005
2006
2007
2008
1
Total External Debt
US$billion
8,594
10,613
9210
9521
12091
9364
8556
8852
3
Debt per capita
US$
931
100
1.001
526
580
494.2
503.3
505.8
3
Bilateral Debt
US$billion
1 782
1.912
3.322
3370
-
9870
3816
-
3
Multilateral Debt
US$billion
57
192
294
418.9
-
393.3
282.3
-
1
Private Debt
US$billion
5 767
7 318
3535
5731.6
4813
3869
4457
4703
1
Public Debt
US$billion
2827
3295
5584
3788
7277
5468
4095
4148
2
External Debt/Exports
%
214.7
295.4
127.4
73.3
51.08
-
9.72
-
2
External Debt/GDP
%
1046
468.6
213.6
51.3
39.5
20.7
13.2
11.2
1
Debt service Paid
US$million
326
464
1991
2285
2646
2908
3491
2052
2
Debt service/Exports
%
8.1
12
15.1
16.6
10.9
11.4
11.8
11.9
2
Grants
US$million
192
328
206
-
40.7
-
45.1
47.2
1
GDP at Current Price
US$million
-
6.699
54796
85149
102954
116502
135507
158974
Source:
1
Africa statistical yearbook 2009
Africa development indicators 2005
African Development Bank Statistics 2009
3
AFRODAD staff estimates using data from OECD & AfDB
IMF country brief
AfDB/OECD reports 2006 Africa Economic Outlook,
4
2
AFRODAD COUNTRY PROFILES - ANGOLA
3