According to African Energy Chamber analyses, Angola, Senegal, Cameroon, Ghana, and Nigeria are among the most hard-hit amid COVID-19 pandemic and oil price plunge.
Angola revises national budget and suspends CAPEX; Senegal’s first oil development faces debt arrangement challenges; Nigeria poised for a major revenue loss; Analysts predict Ghana will get half its projected revenue; Cameroon can expect to see a three percent drop in economic growth.
African oil-producing and reliant countries have been among the most hard hit by the COVID-19 pandemic and declining oil price. 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 percent of GDP by 2022 from approximately 90 percent in 2018 and, over 100 percent 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, Davis de Sousa shared that Angola would also be freezing 30 percent 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 percent 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 […]