Angola: Public investment in Angola

Public investment in Angola will be subject to a tighter selection process in order to make the application of funds stricter.

The  budget execution, particularly in the public investment category, is presently subject to new internal procedures, which are considered to be stricter and include the approval of the country’s President.

This approval is presently a requirement in additional than on stage of the bureaucratic payment processes. The measure, Africa Monitor said, is intended to increase the strictness with which public investments are made, at a time at the same time as the effectiveness of investments is seen as essential for economic diversification.

Last week the Angolan Finance Minister, Armando Manuel, said that the proposed 2014 National Budget included spending of 7.2 trillion kwanzas (US$74.159 billion).

The minister said that the National Budget’s priorities were focused on the social sector (30 % of spending) and infrastructure, and that there would be a budget deficit of no additional than 10 %.

The macro-economic scenario on which the National Budget is based includes Gross Domestic Product (GDP) increase of 8.8 %, which will be driven by increase in the non-oil sector and a rate of inflation of between 7 and 9 %, the minister said.

The kwanza, Angola’s national currency, is expected to remain stable at an exchange rate of around 98 kwanzas to the dollar and the benchmark price for each barrel of oil – Angola’s major export product – is of US$98.

The new update of the IMF’s projections points to Angola accumulating public account deficits in the next four years, at the same time as the country intends to promote long term budget sustainability by expand the taxpayer base of the non-oil sector.

For this to be the case Angola needs to put in place an effective fiscal “machine”, a process which began in 2012 with the implementation of the Executive Programme for Fiscal Reform. It as well needs to not instantly drive non-oil revenues through public investment , eliminate structural constraints and develop the private sector in complementary areas, according to Portuguese bank BPI in its new statement.

The World Bank has said it believes investment needs to increase in Angola in order to boost productivity and create jobs, as investment levels are still very low compared with the rest of the region (13 % of GDP compared to 24 % over the last three years in Sub-Saharan Africa as a whole).

“Accumulated budget surpluses, significant savings and a low foreign deficit ratio are favourable for increasing public investment without affecting the sustainability of public accounts in the mid term. However, it is significant to manage the effectiveness of this investment , specifically through selection, execution and supervision of the projects,” BPI said.