Angola’s Oil Revenue Soars in Early 2024

Angola’s Oil Revenue Soars in Early 2024

In the first four months of 2024, Angola collected 2.9 billion kwanzas in oil revenues, marking a significant 43 percent increase compared to the same period in 2023. This figure represents 37 percent of the total projected in the General State Budget (OGE).

Analysts at Banco Millennium Atlântico, as reported by Lusa, highlighted that oil tax revenues account for 60 percent of Angola’s total tax revenue and 53 percent of current revenue, according to OGE data.

The oil tax revenues have not only exceeded expectations for early 2024 but also played a crucial role in supporting the payment of debt service.

“The value obtained surpassed expectations, with collections for the first four months of 2024 initially forecasted to account for 33 percent of the total. The surplus thus corresponds to a value of 333.8 billion kwanzas,” noted the analysis.

This exceptional performance was driven by exports averaging 1.15 million barrels per day, surpassing the production forecast of 1.06 million barrels per day for 2024.

The average oil price during this period was $80.59 per barrel, exceeding the OGE estimate of $65 per barrel.

Analysts emphasized that the strong oil tax revenue “is expected to support obligations related to the payment of debt service to both national and international creditors.”

The total debt service for 2024 is projected at around 14 billion kwanzas, with oil revenues anticipated to cover 55 percent of this amount, as per the OGE.

For the first four months of 2024, the predicted debt service value was 5.5 billion kwanzas. The oil revenues collected during this period accounted for 52 percent of the debt service for the same timeframe.

Banco Millennium Atlântico’s report noted, “The management of the impacts of oil revenue collection on fulfilling debt payments is being monitored.”

This positive scenario could justify the declining trend in yields on domestic debt issued by the Treasury, aiming to reduce debt costs, reflecting oil revenues exceeding expectations.

However, the report also highlighted the challenges posed by the current high inflation and reference interest rates, which necessitate higher yields for public debt securities to attract investors and meet the government’s financing needs.

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