Economic news in Angola is marked by the end of the gasoline subsidy, a measure that takes effect from June 5, 2023, after the liberalization of prices in 2021. This decision was announced at a conference of press of the Minister of State for Economic Coordination, Manuel Nunes Júnior. The price of gasoline at the pump rises from $0.49 to $0.87 as fuel subsidies cost the state about $3.8 billion in 2022.
The end of the gasoline subsidy in Angola is good news for neighboring countries, which suffered from unfair competition from petroleum products from Angola. Smugglers bought large quantities of subsidized gasoline to resell it at a lower price in neighboring markets, failing to ensure payment of customs and excise duties. The rebalancing of prices between Angola and its neighbors will reduce fraud and loss of tax revenue.
Angola was strongly affected by the oil crisis of 2014-2015, characterized by a significant drop in the price of the barrel, which led to an increase in public debt, a large budget deficit and a strong depreciation of the local currency. The partnership program with the IMF led to the liberalization of gasoline prices and now the end of the fuel subsidy. However, a mitigation measure has been provided for certain categories, such as taxi drivers, farmers and fishermen.
This major economic change is expected to have long-term consequences for the government’s social policies, particularly with regard to housing and social security policy. Economists believe that the end of the gasoline subsidy should boost tax revenues and, in turn, the country’s long-term economic development.
In a region plagued by conflict and insecurity, the measure to end the gasoline subsidy in Angola is a strong signal to other countries in the region and sends a positive message of economic stability.