This modeling effort is aimed primarily at long term trends rather than the short run cycles of hyperinflation and control which have plagued Angola for the past decade. Nevertheless, it is important to place this effort in historical context. Independence came to Angola in 1975 after more than four hundred years of Portuguese rule and was followed almost immediately by civil war, which reached unprecedented levels of death and destruction following UN sponsored elections in 1992. A peace accord was implemented beginning in 1994 but has now broken down, leading to renewed hostilities through much of the country. Angola's economy remains severely affected by the long war and the destruction resulting from it and though there continue to be severe problems with alternating cycles of inflation and control, there are long run trends related to growth and oil revenue that can be analyzed to help orient policy toward long run goals.
Diamonds constitute an additional factor exacerbating the already strong effects from oil.
Prior to independence Angola was the world's fourth largest coffee exporter and exported more than 400,000 MT of maize a year. Exports of both of these crops are now near zero. Offshore production is increasing with additional exploration continuing in order to expand output substantially over the next few years. Virtually all inputs used in production are imported by the oil companies. Oil receipts are used primarily to service foreign debt and to support the government budget which is expended mainly on defense, debt service and maintenance of the central government apparatus in Luanda.