Angola: End of fuel subsidy
The Angolan government recently announced, through its Minister of State for Economic Coordination, Mr. Manuel Nunes Júnior, the end of the country’s fuel subsidy. This decision comes into force on Monday, June 5, 2023 and was applied immediately after being announced. Gasoline prices therefore increased by US$0.49 to US$0.87 per liter and state expenditure on the fuel subsidy was estimated to be around US$3.8 billion in 2022.
According to the statesman, the funds recovered thanks to this decision will make it possible to finance the social policies of the government, in particular with regard to housing and social security. Although the effects of this decision will only be noticeable in the long term, it demonstrates the Angolan government’s desire to reduce its debt and strengthen its economy.
A decision that delights neighboring countries
Angola is the fourth country in the world where fuel is the cheapest, generating an important traffic of smuggling of petroleum products to neighboring countries. The end of the fuel subsidy therefore sounds like good news for neighboring countries, who hope to see a drop in smuggling and an increase in the taxation of the sector.
This decision is in line with other African oil-producing countries such as Nigeria or Ghana, which also ended the fuel subsidy to strengthen their economy and reduce their budget deficit.
Mitigation measures envisaged for certain sectors
The government has planned mitigation measures for certain sectors such as transport and food, which are pillars of the country’s economy. Indeed, taxi drivers, farmers and fishermen will be spared from these price changes so as not to impact their economic activity.
This decision reflects a long-term vision of the Angolan government, which seeks to balance the country’s public accounts and strengthen its economy. It is an important step in the economic history of Angola and neighboring countries affected by the smuggling of petroleum products