Angola WT/TPR/S/158 
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I. ECONOMIC ENVIRONMENT 
(1) OVERVIEW  
1. Angola covers an area of 1.25 million km2 on the Atlantic coast of Africa.  With a western 
coastline of 1,600 km, it is bordered by Congo (Br azzaville) to the north, Congo (D.R.) to the north 
and east, Zambia to the east, and Namibia to the south.  The population is estimated at some 
15.5 million1, of which it is officially reckoned that 34% live in urban areas.2  Thirty years of civil war 
led to a large number of internally displaced pe rsons, as well as refugees living outside Angola; one 
United Nations estimate in November 2001 stated that there were as many as 4.1 million displaced persons, although more recent estimates put the number at between 40,000 and 340,000.
3  
2. Per capita GDP in 2004 was estimated at roughly US$1,305 and GDP per capita on a 
purchasing-power-parity (PPP) basis in 2003 was estim ated at US$2,344, well above the sub-Saharan 
average.4  Poverty is still strongly entrenched.  Angola was 160th out of 177 countries in the UNDP 
Human Development Index (HDI) for 2005 (166th in 2004), and the difference between its ranking in 
terms of per capita GDP and its HDI was 34 points (Table I.1).  Life expectancy at birth is 41 years and, with a total fertility rate of 7.2 births per woman,  the mortality rate in the first five years of life is 
estimated at 260 per thousand live births.  Annua l health expenditure is some US$70 per capita
5;  the 
education budget is 3.9% of GDP, and it was estim ated that 61% of primary age children attended 
school in 1998-99.6  Half of the population was estimated not to have access to clean water in 2002.7 
Income distribution is extremely skewed;  one estim ate of the Gini coefficient, published in 2001, was 
0.62 for urban income inequality8, and it is estimated that more than two thirds of Angola's population 
lives below the official poverty line of US$1.07 pe r day, and 28% in extreme poverty (US$0.70 per 
day).9 
3. Since the end of the civil war in 2002, Angola has made progress in stabilizing the 
macroeconomy, consolidating peace, clearing la ndmines and beginning the reconstruction of the 
economic infrastructure.  However, economic grow th remains largely dependent on the performance 
of the oil and diamonds sectors; relatively little progress has yet been made in the rebuilding of 
agriculture and industry, and there is a large in formal economy.  Greater security in the country, 
combined with greater macroeconomic stability, ar e two essential preconditions for the rebuilding 
process.  However, there is still a severe shorta ge of skills; many markets are still distorted by 
subsidies, price controls, and extensive State or  parastatal participation;  and much of the 
infrastructure is still destroyed or damaged,  with landmines remaining a significant hazard.10  Many 
challenges lie ahead in progressing on a broad range of structural reforms and in increasing 
transparency and participation in the reconstruction process.   
                                                      
1 IMF (2005a).  No census has been taken in Angola since 1970.  The CIA World Factbook gives an 
estimate of 11.2 million for July 2005. 
2 Government of Angola (2003). 
3 Norwegian Refugee Council. 
4 IMF (2005b) and UNDP (2005a). 
5 WHO (2005). 
6 UNDP (2005a). 
7 UNDP (2005a). 
8 Aguilar (2001).  The Gini coefficient is a measure of income inequality: a value of 0 denotes perfect 
equality and 1 complete inequality (see www.http ://en.wikipedia.org/wiki/Gini_coefficient).  
9 Government of Angola (2003). 
10 Although de-mining is progressing,  with an estimated 20,000 km2 of land cleared between 1999 and 
2003, it is estimated that there may still be between five million and ten million landmines in Angolan soil.  For 
a comprehensive survey of the situ ation in 2004, see ICBL (2004). WT/TPR/S/158 Trade Policy Review 
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Table I.1 
Main social and economic indicators  
Land area 
 Population (2004) 
Urban share of population (2004) 
Annual population growth  (trend 2002-15) 
 1,246,700 sq. km. 
 15.5 million 
34 % 
2.9% Nominal GDP at current market prices 
(2003) GDP per capita, purchasing power parity, 
2003 US$983.2 million 
 US$ 2,344 
UN human development index (2005) - Overall ranking -    GDP per capita rank 
Life expectancy at birth (2003) 
Infant mortality rate per '000 live births (2003) 
Under five mortalit y rate per '000 live 
births (2003) Population without sustainable access to 
improved water source (2002)  
160 126
 
40.8 years 154  
260 
 50%
 
  
  
Enrolment ratio in education (2002) 
- Pre-school - Primary 
- Secondary 
 Adult literacy (2003) 
- Male 
- Female  
  
 
.. 61% 
.. 
 66.8% 
.. 
.. 
.. Not available. 
Source : UNDP (2005a) ;  IMF (2005a and b).  
4. The economy of Angola is highly dualistic.  Oil extraction is the largest single contributor to 
GDP and the largest export item. Increasing o il prices have benefited government revenue 
significantly, but concerns remain concerning transp arency of the payments process for oil and the use 
of oil revenues.  The civil war led to the destructi on of both agriculture and industry (Chapter IV) and 
the challenge is now to rebuild. 
(2) RECENT ECONOMIC PERFORMANCE  
(i) Growth, employment, and poverty reduction 
5. Angola's overall economic growth rates (measured by increase in estimated GDP) have varied 
considerably in the last three years, falling from 14. 4% in 2002 (the year the civil war ended) to 3.4% 
in 2003, and accelerating to 11.2% in 2004 (Table I. 2).  Almost all of these changes were due to 
variations in the value of oil output which, af ter rising by over 20% in 2002, declined in 2003 and 
increased sharply again in 2004.  Since 2001, non-oil sector GDP has grown more steadily than the oil 
sector, at rates between 8% and nearly 10%.  Wo rld Bank projections for 2005 suggest that, with 
increasing oil prices, overall GDP growth might average 18% annually over 2005-07.11   
6. Petroleum is the largest sectoral contributor to Angola's formal GDP, accounting for 48% in 
2003 (Table I.3).12  Total mineral extraction, including di amonds and other minerals, accounted for 
53%.  Angola's oil reserves were estimated at 22,8 00 million bulk barrels in 2004, the fifteenth largest 
in the world and second in Africa after Nigeria.13  
7. Within the formal non-oil economy, "trade and commerce" and "non-tradeable services" are  
the largest sectors, accounting jointly for an est imated 59% of non-oil formal sector GDP in 2003; 
agriculture is the third largest with 16.6% in 2003. 
                                                      
11 World Bank (2005).  
12 Between 2000 and 2003, the value of oil sector GD P increased from US$5 billion to US$6.5 billion, 
but its share in GDP fell from 60% to 48.3%, while the share of "non-tradreable services" increased from 6.7% 
to 15.1%.  IMF (2005). 
13 CIA (2005). Angola WT/TPR/S/158 
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Table I.2 
Economic performance, 2001-04 
(Per cent and US$) 
  2001 2002 2003 2004 
GDP at current market prices  (US$ million)  8,936 10,792 13,825 19,535a 
GDP at current market prices (Kz billion) 197.1 471.6 1,031.4 .. 
Non-oil GDP at current market pr ices (Kz billion) 142.0 220.6 532.9  
GNI per capita (US$) 544 650 838 1,154a 
 (Annual percentage change) 
Real GDP  3.1 14.4 3.4 11.2a 
Real GDP (non-oil) 9.4 7.9 9.8 8.8a 
Broad money, M3  (December) 41.7 107.6 180.3 .. 
Consumer price index (annual average) 248 325 109 98a 
(Per cent) 
Interest rates     
Time deposit rate (0-90 days, December) 56.1 41.0 26.7 .. 
Commercial lending rates (0-180 days maturity, 
December) 97.6 99.7 93.4 .. 
Central bank discount rate (December) 150.0 150.0 150.0 .. 
     
 (Per cent of GDP) 
Government fiscal balance, before grants (accrual 
basis) -4.0 -9.3 -7.9 .. 
Domestic revenue  45.1 40.5 37.5 .. 
Non-oil sector 9.2 9.4 9.4 .. 
Grants received 2.4 0.0 0.8 .. 
Total expenditure 49.0 49.8 45.5 .. 
(US$ million) 
External sector     
Current account balance   -1,329 -150 -720 .. 
of which: oil sector 1,362 3,856 1,971 .. 
Net merchandise trade 278 808 -1,452 .. 
Exports (f.o.b.) 3,457 4,568 4,028 .. 
Imports (f.o.b.) 3,179 3,760 5,480 .. 
    Average price of Angola's oil (US$/barrel) 22.7 23.7 28.2 36.4 
Financial and capital account 954 -552 1,103 .. 
Overall balance -842 -551 -5 .. 
Gross official reserves  732 375 660 1,365 
in months of imports (c.i.f.) 1.2 0.5 0.9 .. 
External debt/GDP ratio (%) 81.3 81.0 69.9 48.6 
.. Not available. 
a IMF staff estimate. 
Source:   IMF(2005a), International Financial Statistics , August 2005, Washington, D.C . and (2005b), Angola:  Selected 
Issues and Statistical Appendix, and Staff Report,  August 2005, Washington, D.C. 
8. The size of the informal sector raises questions on the accuracy of data on total GDP and 
sectoral shares. With the disruptio n caused to the economy by the civ il war, the informal sector has WT/TPR/S/158 Trade Policy Review 
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become increasingly important in Angola, causing ser ious implications for the economic structure and 
for tax revenue.  It is estimated that up to 70% of jobs in Angola are within the informal economy.14 
Table I.3 
Sectoral shares in GDP, 1999-03 
(Per cent) 
  1999 2000 2001 2002 2003 
Share of main sectors in GDP 
(a) including oil sector and import duties      
Agriculture, forestry and fishing 6.3 5.6 8.1 8.1 8.2 
Mining and quarrying 66.3 66.4 57.3 58.0 52.9 
Petroleum and LPG 58.1 60.0 51.1 53.2 48.3 
Diamonds 8.1 6.4 6.1 4.8 4.5 
Manufacturing 3.4 2.8 3.9 3.7 3.8 
S e r v i c e s       
Construction 2.9 2.7 3.6 3.4 3.6 
Electricity and water supply 0.0 0.0 0.1 0.0 0.0 
Trade and commerce 15.1 14.2 15.4 14.2 14.2 
Non-tradeable services 4.6 6.7 9.3 16.7 15.1 
Import duties 1.2 1.3 2.2 1.8 2.1 
(b) excluding oil sector and import duties      
Agriculture, forestry and fishing 15.7 14.7 17.5 13.9 16.6 
Mining and quarrying 20.0 16.3 13.1 10.6 9.2 
Manufacturing 8.6 7.3 8.3 8.3 7.7 
S e r v i c e s       
Construction 7.1 7.1 7.7 7.7 7.2 
Electricity and water supply .. .. 0.1 0.1 0.1 
Trade and commerce 37.1 37.0 33.1 31.6 28.7 
Non-tradeable services 11.4 17.2 20.0 23.7 30.5 
.. Not available. 
Source:  IMF (2005b), Angola: Selected Issues and Statis tical Appendix, and Staff Report,  August 2005, Washington,  D.C. 
9. The Government's Poverty Reduction Strategy , published in September 2003, focuses on ten 
priority areas of policy, with a number of timetabl es and goals clearly articulated. The main objectives 
are:  
-   de-mining (60,000 km2 of ground to be cleared by 2006);  
-  food security and rural development (pr oduction of cereals, vegetables, roots, and 
potatoes to be increased by 2006;  assistance for seed production and fisheries; replanting of forests;  assistance for i rrigation;  rehabilita tion of agricultural 
development stations;  assistance to women;   and new micro-finance initiatives);   
-  basic infrastructure (by 2006, rehabilitati on of 5,600 km. of roads and bridges, and  
maintenance of 15,500 km. of roads;  increasing access to drinking water to 76% in urban areas and 46% in rural areas, a nd access to sanitation to 79% and 32%, 
respectively; increasing the number of familie s with electricity to 25%; making social 
housing available in Luanda and the provin ces;  and rehabilitation of railway lines); 
                                                     
 
14 IRINNews (2004).  A recent discussi on of the informal sector is cont ained in Cain (2004).  See also 
Development Workshop (2005). Angola WT/TPR/S/158 
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-  macroeconomic management (improved public finance a nd procurement procedures;  
price and exchange rate stability with inflation below 10% from 2006;  real GNP 
growth target of 13.9% over 2003-07;  fiscal surplus of around 3.8% of GNP by 2007; 
gross international reserves at 2.2 months of imports by 2007;  expansion of the 
commercial banking system;  more efficien t and equitable revenue collection;  and 
public accounts transparency); 
-   HIV/AIDS (universal access of population to information, testing,  and counselling 
services, and to condoms, by 2007/8);   
-   education (100% primary education by 2015;   education for street children;  reduction 
in adult, including women's, illiteracy);   
-   health (reducing under-five and maternal mortality rates by 75 per thousand by 2015, 
and blocking and reversing the spread of HIV/AIDS, malaria, tuberculosis, sleeping 
sickness, and leprosy);  
-   social reinsertion of displaced people (rehabilitation of rural communities, and 
mechanisms to ensure efficient management of the process);  
-   employment and professional training (ada ptation and decentralization of technical and 
professional training systems);  and 
-   governance (reinforcement of the judicial system;  improvement of administrative 
services;  and greater decentralization with increased accountability).  
(3) MAIN MACROECONOMIC POLICY DEVELOPMENTS  
(i) Monetary and exchange rate policy:  effects on inflation 
10. Since 2000, and more particularly since 2003, Angola has undertaken a process of 
macroeconomic stabilization, focussing predominantl y on monetary and exchange rate policies.  In 
the period 2000-02, an excess of liquidity gave rise to  a seriously inflationary situation, with an 
annual average rate of 160% (235% in the year 2000) .  In February 2003, the authorities adopted a 
series of monetary, exchange and fiscal measures aimed at breaking the inflationary cycle and 
restoring confidence in the economy.  A Central Treasury Account was established in the National 
Bank of Angola (BNA) to manage public finances.  Compulsory reserves of banks were increased;  
the limits of exchange exposure of banks were set as share of the ca pital of each bank, and new rules 
were adopted for sales of foreign currency, with a "D utch auction" replacing a "first price" auction  
system.15  Further measures were adopted in August 2003. 
11. Banks had already been authorized in 199 9 to conduct exchange operations and open 
accounts in foreign currencies for residents and non -residents, and the exchange rate had been 
liberalized.16  In 2003, the limit of foreign exchange aut horized to be sold to private individuals was 
raised to US$5,000.17  Currently, profits and dividends from private investment up to US$100,000 
may be freely transferred.  There remain limits on the availability of foreign exchange for invisible 
                                                      
15 A "Dutch" or "second price" auction is an auction in which the lowest price necessary to sell the 
entire offering becomes the price at wh ich all items offered are sold.  The winning bidder pays the price that just 
clears the market, even if it is lower than his own bid.  A "first price" auction is one at which the highest price 
bid under a sealed-bid system is su ccessful (Gasha and Pastor, 2004). 
16 Decrees 4/99 and 1/99, respectively. 
17 Instruction 12/03. WT/TPR/S/158 Trade Policy Review 
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transactions, such as travel, medical and educatio nal allowance;  and on unrequited transfers to 
foreign based individua ls and institutions.18 
12. According to the authorities, these measures have improved the functioning of the money 
market, reduced inflation and unified the formal and informal foreign exchange markets.  Inflation fell 
to 43.5% in 2004 and to 13.8% between January a nd September 2005:  the authorities sought a target 
of 15% for the year 2005.19 
13. The Government is committed to monetary stabili zation in order to curb inflation and reach 
single-digit levels.  Such a policy obviously must be  combined with strict control of public finances 
(section (ii) below), and depends on success in rev italizing the economy and creation of a better fiscal 
balance. 
14. However, the "hard-kwanza" policy also contains  risks for structural redevelopment.  The 
resulting increase in prices of exportable goods agains t imports may not be harmful in relation to oil 
exports that are denominated in dollars;  however , the combination of a deliberate "hard kwanza" 
policy and the risk of "Dutch disease" resulti ng from the increasing role of oil in the economy 
(Box I.1) may mean that domestic agricultu ral and industrial production becomes priced 
uncompetitively in relation to imports (Chapter IV(2)(i)(a)), and may prejudice the chances of 
redeveloping production and exports of  goods other than oil and diamonds.  This is therefore a policy 
area that still requires careful surveillance.  
(ii) Fiscal policy  
15. According to IMF data, Angola's overall fiscal de ficit, which jumped from 3.6% to 9.3% of 
GDP between 2001 and 2002, declined to an estimated 4.6% of GDP in 2003, helped by rising oil 
prices and increased foreign borrowing.20  IMF statistics show that the share of GDP accounted for by 
tax revenue, principally from oil, declined steadily since 2000, from 50.2% in that year to 37.5% in 
2003;  this can partly be explained by the difference in revenue structure of ne wer and older oil fields.  
Recorded expenditures by the Government have al so been falling as a share of GDP, from 81.5% in 
1999 to 45.5% in 2003.  Angolan official estimat es for 2000-04 show the current budgetary balance 
moving from a deficit of 3.6% of GDP in 2000 to 0.4% in 2003, and to a surplus of 5% in 2004. 
16. According to the authorities, petroleum tax and royalty receipts accounted for US$5.9 billion, 
or 78% of Government revenue (28% of GDP), in 2004;  taxes on external trade (other than 
petroleum), at US$39 million were 5. 5% of revenue and 2 % of GDP.21 
17. The functional distribution of Government e xpenditure shows that, in 2003, the highest 
classifiable share (10.2%) went to "energy, agricu lture, mining, and transportation" – a very broad 
category of multiple uses.  General public services a ccounted for 6.7% of expenditure, social security, 
welfare and housing for 4.5%, and education and health  jointly for 5.5%.  The percentage of public 
expenditure that was "unclassified" showed a marked improvement at 14%, down from 29% in 2000.
22  
                                                      
18 IMF (2005b). 
19 Inflation rate, based on the index of consumer prices for the city of Luanda.  See Ministry of Finance 
online information.  Available at:  h ttp://www.minfin.gv.ao/ economia/inflacao.htm. 
20 IMF (2005b).  The non-oil fiscal deficit rose to 40.4% in 2002, falling to an estimated 32.6% in 2004 
and is projected by the IMF to remain at around 25% through to 2009. 
21 Angola Ministry of Finance, Balanço Orçamental Estatístico, online data.  Available at:  
http://www.minfin.gv.ao/dni/petroleo/bal2000-2004.pdf. 
22 IMF (2005b). Angola WT/TPR/S/158 
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Box I.1:  Dutch disease and Angola 
"Dutch disease" – named after the Netherlands' econo mic experiences in the 1960s after the discovery of 
North Sea oil – refers to the harmful effects on an econo my of real exchange rate appreciation resulting from 
a rapid, large inflow of funds. Although the "disease"  is generally associated with a natural resource 
discovery, it can occur from any development that results in a large inflow of foreign currency.  
When a country catches Dutch disease, the traditiona l export sector becomes crowded out by the new, 
booming export sector and the non-traded goods and services sectors.  
A jump in non-traditional exports initially raises overall income as more foreign exchange flows in. If  
foreign currency is converted into lo cal currency and spent on domestic non-traded goods, the real exchange 
rate tends to appreciate; either (if th e nominal exchange rate is fixed) by  an increase in th e money supply and 
its inflationary effects on domestic prices, or (if the nominal exchange rate is flexible) by driving up the value of the domestic currency. In either case, real exchange rate appreciation weakens the competitiveness 
of the country's exports.  At the same time, capital and labour resources tend to shift into production of 
domestic "non-traded" goods and services – to meet the increase in domestic demand – and into the booming new export sector. Both of these transfers shrink production possibilities in the lagging traditional export 
sector.  
Some short-term respite may be gained through temporary protection of selected sectors, as Angola appears 
to be doing through selective increases in tariffs, with in its WTO bindings;  but the process of choosing 
"national champions" has rarely been a long-term success in developed or developing economies. Foreign 
exchange intervention, leading to increased official foreign exchange reserves, appears to have been used 
extensively by Angola in 2003 and 2004. Such a measure may help to insulate the economy from short-run 
disturbances. Management of additional wealth transp arently, through, for example,  a central bank account 
or a trust fund, has been a partial solution chosen by some countries that have managed the process 
successfully, such as Norway.  Again,  Angola has gone down this route (Chapter IV) and the funds accruing 
appear to have been used largely to  increase foreign exchange reserves. 
In countries whose new-found wealth is likely to be long-lasting, policymakers also need to manage the 
inevitable structural changes in the economy so as to  ensure economic stability;  for example, by boosting 
productivity in the non-traded goods sector and investment in worker retraining, or by diversification of exports to reduce dependency on the booming sector and make the country less vulnerable to external 
shocks. 
The challenge for a country, such as Angola, which has to restart its non-oil economy in the presence of real 
exchange rate appreciation and a "hard" nominal exchange  rate policy, is how to create conditions that will 
encourage production of other goods and services th at can compete with cheaper imports, or become 
exportable. 
According to the Angolan authorities, the increase in foreign exchange reserves may function as a self-
generating process of economic development.  Coherently with the Government's macroeconomic stance, 
the additional reserves are available to banks and foreign investors for economic development purposes.  Additional foreign resources from favourable oil price developments are expected to continue the process. 
Source:  Ebrahim-Zadeh, Christine (2003), "Dutch Disease: Too much wealth managed unwisely", Finance 
and Development , vol. 40, No. 1, Washington, D.C.; Corden W.M. and J.P. Neary (1983) "Booming 
Sector and De-industrialisation in a Small Open Economy", The Economic Journal , vol. 92, p. 825-
848;  and comments by the authorities of Angola.
 
18. The Public Investment Programme for the period 2005-07 is to be financed principally by 
loans from Brazil, China, Germany, India, Isr ael, Poland, and Portugal;  most recently, the 
Government concluded a major oil-backed loan fro m China aimed at financing economic and social 
infrastructure, including road and railway constructio n, rehabilitation of irrigation, import of lorries, 
and construction or rebuilding of  schools and medical facilities.23  
                                                      
23 Ministry of Finance online information.  Available at http://www.minfin.gv.ao/noticia/outra043.htm. WT/TPR/S/158 Trade Policy Review 
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19. Since 2001-02 efforts have been made, under th e Government's Programme of Modernization 
of the Management of Public Finance, to improve  both the transparency and the quality of fiscal 
indicators.24  However, Angola's continuing dependen ce on bilateral lending, often based on the 
supply of goods and services in return for the supply of oil, still raises serious questions about the 
conditions under which such loans are given, the im plicit prices at which oil is supplied to the 
countries from which the loans come, and the pa yment and accounting mechanisms involved (for 
example, whether payments are correctly account ed for and channelled through the banking sector 
and the National Bank).25 
(iii) Governance 
20. Angola has long been criticized for corruption and rent-seeking activities.26  In recent years, 
the Government has taken various steps to bring about greater transparency and accountability in its 
operations, including the Public Finance Manage ment Programme;  the Customs Modernization 
Programme;  the establishment, since 2003, of a unified budget including former off-budget operations;  improved auditing of the National Bank of Angola (BNA);  the creation of a single 
Treasury Account with the BNA
27;  greater transparency in publication of data on payments made in 
relation to agreements for oil concessions28;  and the publication of the Petroleum Sector Assessment 
by KPMG (Chapter IV (3)(ii)(a)).  However, Gove rnment procurement procedures are not published  
(Chapter III (3)(viii));  the privatization process for State-owned industries is not entirely transparent; 
the Government has yet to implement the recommenda tions of the Petroleum Sector Assessment;  and 
financial accounting relating to oil-based b ilateral loans appears non-transparent.   
21. Angola has signed, but not yet ratified, the United Nations Convention against Corruption.29  
It has also endorsed the principles of the Extractiv e Industries Transparency Initiative (EITI) and is 
considering how to implement the initiative.30  Recent press reports suggested that implementation 
may depend on reaching agreement on an IMF programme.31 
                                                      
24 Ministry of Finance (2002). 
25 For example, the terms of the loan from China have  not been made public, giving rise to concerns 
about transparency and accountability (IRINnews, 2005b). 
26 Transparency International (2004 and 2005).  Transparency Internati onal, in its Corruption 
Perceptions Index for 2004, rated Angola as equal 133rd out of 146 countries and noted that oil-producing 
nations were prone to high corruption;  in the index for 2005, Angola was ranked 151st out of 159 countries.  
Transparency International (2004 and 2005).  The CPI is a "survey of surveys" based on mainly secondary 
sources, including, in the case of Angola, information from the Economist Intelligence Unit, Merchant 
International Group, World Markets Research Centre, and World Economic Forum. 
27 IMF (2003b). 
28 See for example, Angola News Service (2004). 
29 The Convention has been signed by 111 countries, but is not yet in force;  Angola signed in 
December 2003.  UNODC on line information.  Available at:  http://www.unodc.org/unodc/en/ crime_ 
signatures_corruption.html#S [19 July 2004]. 
30 EITI is a voluntary intergovernmental and private sector initiative that seeks to improve transparency 
and accountability in resource-rich countries.  Donor members of EITI are France, the G8, Norway, and the 
United Kingdom.  Eight countries have made "unequivocal public statements" outlining how they intend to implement EITI.  Twelve other countries, including Angola, have endorsed its principles.  Seventeen  
multinational resource companies, five international NGOs and four intergovernmental organizations are 
members of EITI.  See EITI onlin e information.  Available at:  http/www.eitransparency.org.  
31 Financial Times , 27 October 2005, "Angola to join corruption fight after IMF deal". Angola WT/TPR/S/158 
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(4) BALANCE -OF-PAYMENTS DEVELOPMENTS  
(i) Current and trade accounts, and international reserves 
22. Since 2001, Angola's overall current account balan ce has generally been in deficit, with net 
outflow on services and income accounts exceeding the trade surplus (Table I.4).  The non-oil balance 
remains in substantial deficit, while the oil sector  maintains considerable surpluses both on trade and 
on the broader current account.  The pressure on the goods and services accounts may be expected to 
increase as and when the redevelopment of the n on-oil economy gets under way, even making 
allowances for the beneficial effects of high oil prices on the petroleum trade account. 
Table I.4 
Balance of payments, 2000-03 
(US$ million) 
 2000 2001 2002 2003 
Current account balance 795 -1,329 -150 -720 
  Oil sector 318 1,362 3,856 1,971 
  Non-oil sector 477 -2,691 -4,006 -2,691 
Trade balance 2,048 4,880 3,457 4,568 
Exports, f.o.b. 7,920 6,636 8,328 9,508 
  Petroleum and gas 7,120 5,905 7,653 8,680 
  Diamonds 739 689 638 788 
  Other 61 42 37 40 
Imports, f.o.b. 3,040 3,179 3,760 5,480 
  Oil sector 1,127 1,178 1,393 2,022 
  Non-oil sector 1,913 2,001 2.367 3,458 
Services (net) -2,432 -3,316 -3,115 -3,120 
Receipts 267 203 207 201 
Payments 2,699 3,518 3,322 3,321 
  Oil sector 1,968 2,643 1,550 1,654 
  Non-oil sector 731 875 1,772 1,667 
Income (net) -1,681 -1,561 -1,635 -1,726 
Current transfers (net) 28 91 31 99 
Financial and ca pital account -450 954 -552 1,103 
Net errors and omissions -50 -467 150 -388 
Overall balance 295 -842 -551 -5 
Change in international reserves  
(- = increase) -631 508 207 -325 
Gross international reserves (months of imports of 
goods and services) 2.1 1.2 0.5 0.8 
Source:  IMF (2005b).  
23. Angola's international reserve levels have hist orically been low in comparison with most 
countries, but have increased markedly in recent year s.  At end 2002, the gross level of reserves was 
US$376 million, equal only to half a month's im ports of goods and services;  by September 2005, 
total reserves increased to US$2,486 million, equivale nt to over four months' imports of goods and 
services.32  Windfall gains from oil earnings have been  devoted to the recovery of international 
reserves (Box 1.2).  
                                                      
32 IMF (2005a). WT/TPR/S/158 Trade Policy Review 
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Box I.2:  Oil prices and Angola’s revenue since 2001  
The world nominal spot price of oil increased, from US$16.61 per barrel in November 2001 to over US$60 
in early September 2005.  Angola's oil showed very similar trends, with the price of Cabinda 32o crude 
increasing from US$18.43 in early January 2002 to US$63.41 in early September 2005.   
Angola’s crude oil output increased in quantity from 741,000 bulk barrels per day (bbd) in 2001 to 875,000 
bbd in 2003 (from 270 million bulk barre ls per year (bby) to 319 million bby), and further to an average of 
951,000 bbd (347 million bby) in 2004.  Production is expected to reach 2 million bbd (730 million bby) by 2007.  Exports of crude increased in value from US$5.8 billion in 2001 to US$8.5 billion in 2003 and to 
US$12.6 billion in 2004 (347 million bulk barrels).  Da ta for January-June 2005 show a volume of 197 
million barrels exported in the period, at an average price of US$42.38, yielding an export value of 
US$8,341 million. 
Assuming that exports in 2005 are 394 million barrels an d, conservatively, that th e average oil price for the 
year would remain at around the level of US$45 per barrel (the IMF, in April 2005, projected US$48.60), Angola’s export earnings from oil could be in the region of US$17 or 18 billion. 
The total fiscal contribution receive d by the State from petroleum taxe s and royalties rose from US$2.5 
billion in 1999 to US$5.9 billion in 2004.  In 2004, earnings from oil exports exceeded Government budget projections by US$4 billion, and the Government made a windfall tax revenue gain of US$1.7 billion, most of which, it is reported, was dedicated to boosting Angola’s foreign exchange reserves.  In January-June 
2005 alone, the corresponding windfall gain on ta xation and royalties was US$1.67 billion.  The 
Government is again in the position of having to choose how to use windfall revenue gains and avoid “Dutch disease” (Box I.1). 
Source:   Angola, Ministry of Finance;  IMF (2005(a) and (b));  United States Energy Information 
                 Administration, Weekly Petroleum Status Report ;  and EIU, Quarterly Report , June 2005. 
(ii) External debt 
24. The vulnerability of Angola's ex ternal position due both to its low level of reserves (noted 
above) and its high level of indebtedness has been noted by the IMF in successive reports.33  Total 
foreign debt, as reported by the IMF, rose to US $8.4 billion in 2003, falling to US$7.9 billion in 
2004.34  In 2001 and 2002, Angola made considerab le repayments of capital on foreign debt;  
however, in 2003 and 2004, the deficit was agai n financed mainly through foreign borrowing.35  The 
IMF estimated that, between 2001 and 2004, Angola's  public debt to exports ratio had fallen from 
369% to 113%36, and the debt-to-GDP ratio to 48.6%. 
25. Most of Angola's external debt is to bilateral o fficial creditors (US$4.9 billion, divided almost 
equally between Paris Club members and others37), or to private banks (U S$3.5 billion, of which 86% 
is oil-guaranteed).38  Debt settlements and relief have been  negotiated bilaterally with Portugal, 
Hungary, Poland, and Germany, as well as with Russia.39  Arrears at end 2004 were estimated to 
amount to US$2.4 billion.  Angola's last ag reement with the Paris Club dates from 1989.40  
                                                      
33 IMF (2003a) and (2005b). 
34 UNDP (2005b);  and IMF (2005b). 
35 IMF (2005b).  
36 In the IMF data, exports are defined net of oil-related expenses such as oil-related imports of goods 
and services and oil companie s' remittances.  IMF (2005b).  UNDP reports the debt service to exports ratio is 
falling from 41% to 18% between 2001 and 2004.  
37 Paris club members are Australia, Austria, Belgiu m, Canada, Denmark, Finl and, France, Germany, 
Ireland, Italy, Japan, Netherlands, Norway, Russian  Federation, Spain, Sweden, Switzerland, the United 
Kingdom, and the United States.  See Paris Club online info rmation.  Available at:  http://www.clubdeparis.org/ 
en/presentation/presenta tion.php?BATCH=BOIWPOI. 
38 IMF (2005). 
39 UNDP (2005b). 
40 Paris Club online information.  Angola WT/TPR/S/158 
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(5) DEVELOPMENTS IN MERCHANDISE TRADE41 
26. The ratio of Angola's trade (exports plus imports) in goods and non-factor services to GDP 
fell from 151% to 127% between 2000 and 2003.  Between 2000 and 2004, the value of Angola's 
merchandise exports is estimated to have increased  by 8.7% in U.S. dollar terms, standing at 
US$8.6 billion in 2003.  The value of imports  increased more substantially, by 120%, to 
US$4.3 billion.    
(i) Composition of trade 
27. Angola remains heavily dependent on exports of  crude petroleum, and to a lesser extent 
diamonds.  Fuels accounted for 98% of exports in 2004, up from 91% in 2000.  Manufactures account 
for between 60% and 80% of the value of imports, with machinery and transport equipment taking 
between of the total 35% and 60% depending on th e year (Chart I.1, Tables AI.1 and AI.2). 
(ii) Direction of trade 
28. The United States, China and France are the ma in purchasers of Angola's oil exports, with 
Belgium and Israel the main destinations for di amonds.  On the import side, European countries 
(principally Portugal and the Netherlands (2003 onl y) the United States, South Africa, and Asia 
(China, India, Japan, and Singapore) are the majo r sources (Chart 1.2 and Tables A1.3 and AI.4). 
(6) OUTLOOK  
29. The outlook for growth in Angola's overall GDP is optimistic.  The IMF is forecasting real 
growth of 13.8% for 2005,  and this figure may well be exceeded thanks to the increasing trend in oil 
prices;  World Bank projections for future years are even higher, at 18-19%.  For the non-oil 
economy, growth of 9.9% is projected.42  
30. Macroeconomic stabilization is ongoing, with th e Government continuing to follow the "hard 
Kwanza" policy, and expecting to reach the target of 15% inflation in 2005.  The need remains to 
reconcile this stabilization with the structural and sectoral development of the non-oil micro-economy 
and the avoidance of Dutch disease.   
31. Angola continues to face many structural di fficulties in alleviating poverty, restoring 
infrastructure, and redeveloping its  agricultural, industrial, and servi ces sectors.  Full integration of 
trade and trade policy as a central element of its strategy will be a necessary element in policy 
development. 
 
                                                      
41 The data on merchandise trade presented here and in the relevant tables comes from UN, Comtrade, 
and is based on partner (mirror) statistics.  
42 IMF (2005b). WT/TPR/S/158 Trade Policy Review 
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0%10%20%30%40%50%60%70%80%90%100%
2000 2001 2002 2003 2004
0%10%20%30%40%50%60%70%80%90%100%
2000 2001 2002 2003 2004Chart I.1
Structure of merchandise ex ports and imports, 2000-04
(a) Exports
(b) Imports
Source: WTO Secretariat calculations, based on UNSD, Comtrade database (SITC Rev.3), mirror statistics.Chemicals Agriculture Textiles and clothing
Other semi-manufactures Other consumer goods Mining
Machinery and transport equipment Iron and steel OtherCrude petroleum Diamonds Other
 Angola WT/TPR/S/158 
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%20002001200220032004Chart I.2
Direction of merchandise trade, 2000-04
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%20002001200220032004(a) Exports
(b) Imports
Source: WTO Secretariat calculations, based on UNSD, Comtrade database (SITC Rev.3), mirror statistics.Brazil South Africa EU(15)
China United States NamibiaChina EU(15)
Korea, Rep. of United States
Korea, Rep. ofOther
Other