Fiscal Deficit and Surplus Tracker
Angola’s fiscal balance has undergone a remarkable transformation over the past five years, moving from deep deficits during the COVID-19 crisis and oil price collapse toward a position of near-balance and intermittent surplus. This improvement reflects a combination of recovering oil revenues, expenditure discipline, and broadening non-oil tax collection – though the trajectory remains heavily dependent on global crude prices.
Fiscal Balance History
| Year | Overall Balance (% of GDP, approx.) | Primary Balance | Key Driver |
|---|---|---|---|
| 2020 | -4.0% to -5.0% | Deficit | COVID-19, oil crash, debt surge |
| 2021 | -1.5% to -2.5% | Near balance | Oil price recovery |
| 2022 | +0.5% to +1.5% | Surplus | Brent above $100/bbl |
| 2023 | -1.0% to -2.0% | Near balance | Moderate oil prices, spending increase |
| 2024 | -0.5% to -1.5% | Surplus | 4.4% GDP growth, revenue gains |
| 2025E | -0.5% to -1.0% | Surplus | Consolidation continues |
The primary balance – which excludes interest payments on public debt – has been in surplus since 2022, a critical achievement for debt reduction. This means the government is generating sufficient revenue to cover all non-interest expenditure, with debt service as the sole driver of the overall deficit.
Revenue-Side Improvements
Fiscal consolidation has been driven primarily by the revenue side:
- Oil revenue windfalls: The 2022 Brent surge above $100/bbl delivered outsized fiscal gains, though prices have since moderated to approximately $74.50/bbl
- VAT expansion: Introduced in 2019 and progressively broadened, VAT has become the largest single non-oil revenue source
- Tax administration: Digitalization of tax collection through the AGT (Administracao Geral Tributaria) has improved compliance and reduced leakage
- Sonangol transfers: Restructuring of the state oil company has increased dividend and tax flows to the budget
Expenditure Discipline
On the spending side, the government has implemented several austerity measures:
- Fuel subsidy reduction (phased, ongoing) to reduce energy subsidy expenditure
- Public-sector wage restraint relative to inflation, reducing the real wage bill
- Capital expenditure rationalization, prioritizing projects with demonstrated economic returns
- Reduction in transfers to loss-making state-owned enterprises
Debt Service Burden
Despite overall fiscal improvement, debt service remains the largest single budget expenditure at 30-40% of revenue. The stock of total public debt stands at $61.93 billion (59.9% of GDP), down from the 119.1% peak in 2020. External debt of $45.57 billion dominates, with China as the largest bilateral creditor.
The declining BNA policy rate (from 20% to 17.5%) is reducing the cost of new domestic debt issuance, providing marginal fiscal relief. However, external debt service is denominated in foreign currency and therefore sensitive to USD/AOA movements.
Sustainability Assessment
The IMF classifies Angola’s debt as high risk but on an improving trajectory. Key sustainability metrics:
- Debt-to-GDP: 59.9%, declining from 119.1% peak (2020)
- Interest-to-revenue: 25-30%, elevated but declining
- External debt service-to-exports: Approximately 20-25%, manageable given current oil prices
Continued primary surpluses combined with GDP growth and moderate inflation will drive further debt ratio compression, provided oil prices remain above the $60/bbl fiscal break-even.
Outlook
The 2026 budget targets further deficit narrowing, with the overall balance moving toward equilibrium. The medium-term fiscal trajectory is favorable but fragile – a sustained oil price decline below $60/bbl or production disruptions could reverse the consolidation gains within a single fiscal year. Economic diversification of the revenue base remains the only durable solution to fiscal volatility.