Angola – where oil accounts for nearly half of GDP, more than two-thirds of government revenue and nearly 98% of export earnings – has an estimated break-even oil price of around US$110 per barrel, and is expected to run a budget deficit of at least 7% of GDP in 2015, despite drastically cutting its 2015 expenditure plans. Luanda is currently attempting to issue debt to global investors to fund its budget deficit. But with increased investor risk aversion due to a more uncertain global economic outlook, emerging-market borrowers – already squeezed by exchange-rate depreciation – are likely to incur higher premiums, making hard-currency debt all the more expensive to service. Meanwhile, Angola’s already impoverished general population has experienced severe shortages in food and medicine, prompting public displays of anti-government sentiment despite notoriously unforgiving security forces. Popular discontent is seen as a factor in President Jose Eduardo dos Santos’s surprise announcement earlier this month that he would step down in 2018 after 37 years as head of state.
Taken from an IISS Strategic Comment email.