The Republic of Angola ended the gasoline subsidy on June 5, 2023. During a press conference, the Minister of State for Economic Coordination, Manuel Nunes Júnior, said that the price at the pump will go from 0.49 to 0.87 USD. The funds saved through this measure will be redirected to social policies such as housing and social security policy.
This decision is a response to the oil shock that the country experienced in 2014-2015, as well as a measure to reduce the country’s budget deficit and deal with the increase in public debt. In addition, Angola hopes to combat fuel smuggling and fraud that occurs between its country and its neighbors, now that the price of fuel no longer presents a sufficient incentive gap for traffickers.
This decision has a considerable economic impact not only in Angola, but also in neighboring countries, which have seen their market flooded with subsidized fuel from Angola, competing with their own fiscal policy and economy. Countries such as Nigeria have also removed the subsidy to deal with their own economic challenges.
However, Angola has planned mitigation measures for the transport and food sectors, mainly so as not to overburden the most vulnerable populations. Let’s hope that this short-term economic measure will bring the social benefits targeted by the Angolan authorities.