African oil-producing and reliant countries have been among the most hard hit by the COVID-19 pandemic and declining oil price. Oil price crashed below $20 dollars on Monday, the lowest in 18 years. In particular, Senegal, Nigeria and Angola continue to face new challenges each day amid the threat of economic fallout.
Angola
In 2020, the Angolan government led by H.E. President João Lourenço, had set out to focus on economic diversification and uplift the country from nearly five years of recession. However, in the face of the oil price slump, the oil-reliant country has slowed the implementation of its planned economic reform strategy, which had included the privatization of state-owned companies and plans to reduce public debt to less than 60 per cent of GDP by 2022 from approximately 90 per cent in 2018 and, over 100 per cent in 2019.
In response to the current market instability, the Angolan government which relies heavily on oil revenue has declared a state of emergency and made the decision to review its national budget. With this, it will object its budget on a reference oil price of $35 per barrel maximum – a significant cut from the initially drawn up $55 per barrel, Finance Minister Vera Davis de Sousa revealed on Friday, explaining that the country’s oil production is expected to tumble to 1.36 million barrels per day(bpd).
Further, Ms Davis de Sousa shared that Angola would also be freezing 30 per cent of its goods and services budget and its CAPEX would be suspended pending completion of the budget review. Meanwhile, the Angolan sovereign wealth fund has agreed to offer $1.5 billion on condition of future repayments through increased tax in the Bank of Angola’s growing debts.
"In this time, the Angolan economy will be best served by swift government action," said NJ Ayuk, Executive Chairman of the African Energy Chamber. "With the finance minister already confirming that the country’s economy will shrink by 1.21 per cent this year, signally a fifth year of recession, Angola needs a solid action plan that involves intense renegotiation strategies with domestic and foreign creditors, if it is to make it out on the other side," he added.
Senegal
Since discovering oil and gas in 2014, the West African country emerged as a major player in the global oil and gas industry, with it moving rapidly on setting up a new Petroleum code in 2019, creating new entities such as […]
