Angolan political stability: 6-month outlook

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Angola’s ruling party, the MPLA, recently won a narrow electoral victory over its UNITA rivals. UNITA contests the election results alleging irregularities. Angola’s political stability, achieved after a brutal civil war, is a pressing issue for Angolans and foreign investors. As UNITA files legal challenges against the election results, the government will need to address long-standing systemic issues in order to assuage opposition grievances.

KJ-1: It is likely that UNITA’s divergence from the official election results will generate localized unrest over the next 6 months.

  • The ruling party, the MPLA, will maintain its grip on power after a narrow victory in the August elections. Support for the MPLA government has fallen by 10 percentage points since the last elections Grey Dynamics.
  • The MPLA suffered an electoral defeat in the national capital Luanda against UNITA Grey Dynamics.
  • The Soviet-backed MPLA and US-backed UNITA fought a horrific civil war from 1975 to 2002. This resulted in the deaths of over half a million people, with several million displaced. Grey Dynamics.
  • Adalberto Costa, the leader of UNITA, refused to accept the election result. 4 of 16 election commission officials refused to endorse official results Grey Dynamics.
  • Voter turnout registered at a lower than expected rate, further amplifying the politically suspicious atmosphere Grey Dynamics.
  • UNITA won in the oil-rich Angolan provinces of Cabinda and Zaire, where energy infrastructure is still under the control of MPLA officials Grey Dynamics.
  • There are lingering fears that disgruntled young people will take to the streets and revolt, despite Costa’s call for calm among his supporters Grey Dynamics. Youth unemployment remains high, heightening the risk of political instability Grey Dynamics.
  • MPLA supporters attack UNITA regional offices in Bocoio. 10 people were injured in the attack and several vehicles were set on fire. Tensions have remained high ever since Grey Dynamics.

KJ-2: It is likely that the MPLA government will further strengthen bilateral relations with Russia and China in the next 6 months.

  • President Joao Lourenço was educated in the Soviet Union and served as a general in the MPLA, a Soviet-backed militant group Grey Dynamics.
  • Angola could join the Russian payment system Mir. Angola’s ambassador to Russia says country will remain open to Russian investors despite Western sanctions Grey Dynamics.
  • Vladimir Putin and Joao Lourenço discussed the Russian invasion of Ukraine and agreed to continue bilateral relations Grey Dynamics.
  • Angola and Russia signed cooperation agreements in 2019 in the areas of trade and defence. A total of 6 SU-30Ks were delivered to Angola. Luanda is also looking to buy S-400 missile systems from Russia. Grey Dynamics. Russia remains Angola’s largest arms supplier Grey Dynamics.
  • Angola’s state-run diamond company says it could face machine and parts shortages due to Western sanctions. Overall diamond mine output is down a third of original production levels Grey Dynamics.
  • 40% of Angola’s $73 billion debt is owed to China. According to the IMF, around 70% of Angola’s oil revenues will be used to service this debt. Chinese Capital-Funded Infrastructure Projects Across Angola Grey Dynamics.
  • Angola is a country participating in the Belt and Road Initiative, with large investments in the agricultural and energy industry Grey Dynamics.
  • Chinese capital played a huge role in rebuilding Angola after the end of the civil war in 2002, however, Angola’s relationship with China has changed in recent years. Even so, Angola still depends on China for its funding sources. Grey Dynamics.

KJ-3: It is highly likely that Angola will continue to benefit from a favorable macroeconomic outlook over the next 6 months.

  • A rise in oil prices along with improved liquidity led to an upgrade in Angola’s credit rating Grey Dynamics. In addition, the country has improved budget transparency in line with IMF recommendations Grey Dynamics.
  • The government has prioritized the repayment of foreign debt in the future Grey Dynamics.
  • Macroeconomic stability in Angola has been achieved through prudent management of exchange rate flexibility by the Angolan central bank Grey Dynamics.
  • Allowing Angolan companies to sell foreign currency directly to commercial banks led to a 23% appreciation in the exchange rate Grey Dynamics.
  • The government has passed new anti-money laundering laws and tax liability regulations to support the inflow of foreign investment Grey Dynamics.
  • The World Bank forecasts Angola’s GDP growth this year at 2.7% in a recovery from the previous year’s recession. Rising oil prices helped fuel GDP growth and debt reduction Grey Dynamics.
  • An agreement with China allowed the postponement of $ 6 billion in debt repayment until 2023 Grey Dynamics.
  • The MPLA is committed to diversifying the Angolan economy. These policies have yet to be translated from rhetoric Grey Dynamics.
  • The government launched a cash transfer program and removed import taxes on basic food items to reduce the rate of inflation Grey Dynamics.
  • The optimistic macroeconomic outlook should not overshadow the very real economic difficulties of Angola which are still unresolved Grey Dynamics

Deadline for information September 9, 2022


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