Angola's Finance Minister Vera Daves de Sousa has warned that public spending on fuel subsidies could increase significantly in 2026, potentially reaching 2.48% of gross domestic product, driven by rising oil prices.
Speaking to Lusa in London, the minister explained that the subsidy impact on GDP had been estimated at 0.9% in the 2026 General State Budget, but could climb to around 2.48% by December, representing a substantial increase in public expenditure.
Vera Daves de Sousa noted that the 2026 budget was drawn up on the basis of average oil production of 1.050 million barrels per day, while current output stands at approximately 1.040 million barrels per day.
Although production is running slightly below the budgetary forecast, petroleum revenues are benefiting from a barrel price considerably higher than the US$61 assumed in the initial scenario. 'But that comes with a cost associated with fuel subsidies, which we have not yet fully removed,' the minister acknowledged. She was in London this week for meetings with investors.
Brent crude, the European benchmark, rose 0.27% on Thursday 10 September to US$101.48 per barrel, while West Texas Intermediate, the US benchmark, advanced 0.23% to US$96.27 per barrel.
In response to the increase in oil revenues, Vera Daves de Sousa advocated a cautious approach, saying she preferred 'not to get too excited' about the current conjuncture. The priority, she explained, remains debt servicing and the acceleration of expenditures already provided for in the budget.
The minister also cautioned against 'great euphoria, new ideas, new projects, which would then lose their footing if the scenario reverses'.
The fiscal headroom created by higher revenues has been used to strengthen the government's negotiating position with financing entities, enabling more active liability management and the securing of better financing terms.
One example is the issuance of US$4 billion in eurobonds carried out this year. Of that amount, US$1.2 billion was deployed in a liability management operation aimed at buying back bonds maturing in 2028 and 2029.
The minister also justified the caution around fully removing fuel subsidies by pointing to persistent weaknesses in mobility coverage and social protection.
The Angolan government is examining the expansion of its bus fleet and the development of a surface metro project, with a particular focus on Luanda, where a significant share of the population is concentrated.
According to Vera Daves de Sousa, existing social and monetary transfers currently cover predominantly rural areas, making it necessary to extend coverage to urban areas before proceeding with the full elimination of subsidies. The minister argued that a complete withdrawal without such guarantees in place would not be 'politically and socially responsible'.
While the expansion of the social protection network remains incomplete, the government also intends to focus on improving the operational efficiency of state-owned companies, notably Sonangol and ENDE.
In the case of Sonangol, Vera Daves de Sousa highlighted the need to 'normalise financial relations' between the company, ministries, provincial governments, and other state entities, including verification of quantities supplied and the existence of outstanding pre-payments.
The objective, she explained, is to 'better organise' these expenditures, ensure their traceability, and 'pay them in due time', preventing them from being subsequently absorbed into the subsidy compensation framework.
In the electricity sector, the minister noted that the tariff applied to large consumers has already been adjusted, with those customers now paying market prices. A partial subsidy, however, remains in place for domestic consumers.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/09/11/mundo/angola/angola-governo-preve-aumento-da-despesa-com-subsidios-aos-combustiveis/
