Event

Angolan President Jose Eduardo dos Santos, 74, has signed a decree setting 23 August 2017 as the date for general elections. The election is set to mark a new chapter for the oil-rich country as dos Santos decided to hand over power after 38 years of iron-fisted rule. The likely victor after the poll will be Joao Lourenço (current Defence Minister and long-time aid of dos Santos). He is the presidential candidate of the Movimento Popular de Libertação de Angola (MPLA), the ruling party since independence from Portugal in 1975. The resignation does not mean the end for dos Santos as he is expected to retain sweeping powers as president of the ruling MPLA party.

Impact on country risk

The likely successor Lourenço moderates the risk for political instability and civil unrest. However, Lourenço is unlikely to bring about major policy changes, as the influence of the MPLA’s old guard and military is even likely to strengthen. Without significant reforms, the outlook for Angola remains gloomy. Economic growth is projected to balance around merely 1.5% at least until 2020 while inflation (around 42% end 2016) is likely to only slowly come down. Payment delays to external suppliers are likely to continue. Indeed, the severe liquidity shortages in the domestic economy are expected to persist as long as the foreign exchange reserves are being artificially held stable at a fairly high level (almost 6.5 months of import cover) by using obscure foreign exchange and capital controls. Furthermore, Angola is suffering from persisting current account and fiscal deficits. In the coming months, finding sufficient financing to cover these deficits – be it on commercial financial markets or through an IMF agreement – will remain important as otherwise the country could still plunge in a messy balance of payments crisis or default.

Analyst: Jolyn Debuysscher, j.debuysscher@credendo.com