LUANDA Oct 17 (Reuters) – The sharp drop in oil prices over the last year cost Angola about $6 billion in revenue, President Jose Eduardo dos Santos said on Monday, and will force the country to borrow more to make up for the shortfall.
Africa’s largest crude exporter relies on oil sales for around 95 percent of its revenues. Oil prices have plunged from a peak in mid-2014, by as much as 70 percent at one stage.
“The systemic shock of the price drop was very strong in the public revenue,” dos Santos said in a speech at the opening of parliament. “Only in 2015, the reduction of the oil price has created a reduction of almost $6 billion in the fiscal revenue.
“Currently, the continuation of the public investment effort is only possible with resource of public debt issue at home and abroad,” he told lawmakers.
In July, the government slashed its growth forecast for 2016 to 1.3 percent from 3.3 percent, while also cutting its annual revenue forecast to $18 billion from $24.4 billion.
The sharp economic slowdown after years of breakneck growth after the end of a long civil war in 2002 has triggered credit rating cuts deeper into junk territory and pushed up government debt. That has created political unease ahead of polls in 2017 in which dos Santos, president since independence in 1979, is expected to again be the ruling party’s sole candidate.
Fitch and Moody’s have both downgraded the southern African nation in recent months, citing the impact of worsening of macroeconomic, fiscal and external metrics due to falling price of crude.
Dos Santos said concrete fiscal measures of how government would wean the country off of dependence on oil would be set out in the 2017 national state budget currently under preparation for submission to the National Assembly at end of October.
Total government debt, excluding that held by state firms, stands at $47.9 billion, including $25.5 billion in external loans, according to the Angolan finance ministry. (Reporting by Herculano Coroado; Writing by Mfuneko Toyana; Editing by Catherine Evans)