2026 Budget Analysis
Angola’s 2026 Orcamento Geral do Estado (OGE) was drafted against a backdrop of moderating economic growth, declining inflation, and the continued imperative of fiscal consolidation. With GDP growth expected to slow to 1.9% in 2025 from 4.4% in 2024, the budget must navigate the tension between supporting economic activity and maintaining the debt sustainability gains achieved over recent years.
Key Assumptions
| Parameter | 2026 Budget Assumption |
|---|---|
| Oil Price (Brent) | $65-70/bbl (conservative) |
| Oil Production | ~1.03M bpd |
| Exchange Rate (USD/AOA) | ~920-940 |
| Inflation (end-period) | 12-14% |
| GDP Growth | 2.5-3.0% |
| BNA Policy Rate | Declining trajectory |
The budget’s oil price assumption is characteristically conservative, set below the current market price of approximately $74.50/bbl. This provides upside fiscal buffer if prices hold and limits the deficit impact should prices fall. At $65-70/bbl, oil revenues are projected to cover core government operations but leave limited room for discretionary capital spending.
Revenue Projections
Total revenue is projected to grow in nominal terms, driven by:
- Oil revenue: Broadly stable assuming production near 1.03M bpd and conservative pricing. Any production gains from TotalEnergies’ CLOV Phase 3 and Begonia projects represent upside
- Non-oil tax revenue: Expected to grow 15-20% on continued VAT broadening, improved compliance, and one-off receipts from economic diversification incentive programs
- Dividends and transfers: Sonangol dividend distributions and BNA profit transfers
The non-oil revenue share is targeted to continue its upward trend, reflecting the government’s long-term objective to reduce oil fiscal dependence.
Expenditure Framework
Spending priorities in the 2026 OGE reflect four pillars:
- Debt service: Remains the largest single expenditure line. External debt amortization, particularly China-linked repayments, dominates. The declining BNA rate should reduce domestic debt service costs on new issuance
- Social sectors: Education and health allocations are targeted to increase as a share of non-debt spending, consistent with development plan commitments and human capital investment in Angola’s young population (median age 16.7)
- Infrastructure: Roads, energy generation, and water supply projects continue, with emphasis on public-private partnerships to leverage limited fiscal space
- Security and administration: National defense and public administration represent a significant but gradually declining expenditure share
Fiscal Balance
The overall deficit is projected to narrow further as a share of GDP, with the primary balance (excluding interest payments) targeted to remain in surplus. This primary surplus is critical for maintaining the downward trajectory of the debt-to-GDP ratio from its current 59.9%.
Risks and Sensitivities
The 2026 budget is sensitive to several risks:
- Oil price downside: A $10/bbl decline from assumptions would widen the deficit by approximately 2-3% of GDP, potentially requiring mid-year spending cuts
- Production disruptions: Aging offshore infrastructure creates production downside risk
- FX depreciation: Kwanza weakness beyond assumptions would inflate kwanza-denominated debt service costs
- Election-cycle spending: As Angola moves closer to the 2027 electoral cycle, pressure for populist expenditure increases may challenge consolidation discipline
Investor Takeaway
The 2026 OGE is broadly consistent with continued fiscal responsibility, though the growth-consolidation trade-off is tightening. Investors should monitor quarterly execution data, oil price realizations versus assumptions, and any supplementary budget requests as the year progresses. The budget’s credibility will be tested by the government’s ability to resist pre-election spending pressures while delivering visible improvements in public services and employment.