President Warns Oil Fall Leaves Angola Short of Foreign Reserves

Reuters

LUANDA, June 22 (Reuters) - Angola is running short of foreign reserves to pay for imports because its national oil firm has not contributed to state coffers since January, President Jose Eduardo dos Santos said.

Remittances from Sonangol, which is now run by the president's daughter Isabel, represented 60 percent of total government revenues, but the firm halted payments after the price of oil fell, dos Santos said on Wednesday.

"Our country lives upon imports, practically. Imports for food, for raw materials to national manufactures, for industry, agriculture, construction, for payments to expats and foreign workers," Dos Santos said after meeting cabinet ministers.

Dos Santos, president since end of brutal civil war in 1979, said the sharp fall in oil prices, which are down more than 20 percent from a year ago, had led to cash flow problems for Sonangol, and Angola now had to diversify its economy.

Oil output represents 40 percent of Angola's gross domestic product and more than 95 percent of foreign exchange revenue.

"Above all, we need to make other goods to export, besides the oil. And that is a strategic task," he said.

Angola has implemented a number of currency controls, including cutting the amount of hard currency travellers are allowed to take abroad, to cope with a foreign currency shortage that has led to a flourishing black market.

The Angolan parliament passed a 6.4 trillion kwanza ($39 billion) 2016 budget in December based on an average oil price of $45 a barrel and daily production of 1.8 million barrels. Its spending plan assumes economic growth of 3.3 percent, a budget deficit of 5.5 percent and inflation of 11-13 percent.

($1 = 165.0600 kwanzas) (Writing by Mfuneko Toyana; Editing by James Macharia and Alexander Smith)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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