Angola: Spending on fuel subsidies set to rise to 2.48% GDP in 2026 – minister

Angola’s minister of finance, Vera Daves de Sousa, has acknowledged that public spending on fuel subsidies is set to soar to 2.48% of Gross Domestic Product in 2026 due to rising oil prices.

In an interview with the Lusa news agency in London, the minister noted that the impact of these subsidies on Gross Domestic Product (GDP) was estimated at 0.9% in the state budget, but could rise to around 2.48% by December 2026, representing a significant increase in public spending.

Vera Daves de Sousa indicated that the 2026 state budget is based on an average production of 1.050 million barrels per day, although the country is currently producing around 1.040 million barrels per day.

Despite the volume being slightly lower than forecast, revenue is benefiting from a barrel price significantly higher than the $61 assumed in the initial budget scenario.

«But this comes at a cost – a cost associated with subsidies and fuel, which we have not yet fully removed,» she acknowledged to Lusa in London, where she was this week for meetings with investors.

The price of the benchmark Brent crude oil contract in Europe rose on Thursday by 0.27% to $101.48, whilst that of West Texas Intermediate (WTI), the benchmark in the United States (US), increased by 0.23% to $96.27.

Against this backdrop, Vera Daves de Sousa prefers «not to get too carried away» by the rise in oil revenues, prioritising debt servicing and accelerating normal budgetary expenditure.

The minister argued for «avoiding excessive euphoria, new ideas and new projects, which may later lose their footing should the situation reverse».

The cash buffer created has been used to strengthen negotiating power with lenders, enabling active liability management and securing better financing terms, she emphasised.

For example, out of a $4 billion (€3.43 billion) issue of eurobonds this year, $1.2 billion (€1.03 billion) was used in a liability management operation to repurchase bonds maturing in 2028 and 2029.

The minister justified the cautious approach to the complete removal of fuel subsidies by citing existing weaknesses in transport provision and social protection.

The Angolan government is examining plans to expand the bus fleet and the light rail project, with a focus on Luanda, where the majority of the population is concentrated.

Vera Daves de Sousa emphasised that current social security benefits and cash transfer provision are primarily directed at rural areas, and that it is necessary to extend this to urban areas before proceeding with a complete removal of subsidies, which would not be «politically and socially responsible» without these safeguards.

According to the minister, whilst the expansion of the social safety net is not yet complete, the Government is focusing on the operational efficiency of public enterprises, notably Sonangol and ENDE.

In the case of Sonangol, she highlighted the need to «normalise financial relations» with ministries, provincial governments and other public enterprises, checking whether the quantities supplied are reasonable and whether there are any outstanding prepayments.

The aim is to «better organise» these expenses, track them and «pay them on time», thereby preventing them from being included in the subsidy compensation framework.

In the electricity sector, Vera Daves noted that the tariff for large-scale consumption has already been adjusted, with such consumers now paying market prices, whilst the partial subsidy remains in place only for domestic consumption.