eliminating fuel subsidies must be properly managed. This implies, among other things, fully understanding the social and economic consequences of subsidy removal on various categories of households and various sectors in the economy. Sequencing is key, with a progressive elimination of subsidies, starting by removing the most politically acceptable ones, while implementing parallel measures. The compensation packages and the information campaign need to be synchronized with subsidy removal to ensure the success of the reform. Success stories have in common a compensation package, such as increased social spending or cash transfer programs targeting the poorest or most affected households, activated before the subsidy removal, or at least in parallel to it. It is also crucial to implement measures to support specific sectors. A second factor of success is a large coverage of the compensation package, that goes beyond the lower decile and covers the lower-middle-income categories and near-poor of the second, third, and fourth deciles. A third factor of success is informing the public beforehand about the detrimental effects of subsidies and the objective of alternative reforms, which, for example, can be done through large-scale information campaigns.

The experience of Angola’s subsidy removal is quite telling on the importance of the timing and sequencing of reform and of the coverage and synchronization of compensation measures. The turmoil that followed the decision to increase gasoline prices in June 2023 highlighted the potential for political resistance and social unrest that may stand in the way of subsidy reform **.** This underlines the importance of clear and timely communication in policy implementation. It also underscores the importance of synchronizing reform and compensation. The second round of removal in April 2024 proved less chaotic since partial subsidy removal on diesel was accompanied by an increase in transportation tariffs. This measure diffused potential tension from actors from the sector but shifted the burden to the society as a whole. The examples of successful reforms in other countries mentioned in the study could provide a useful benchmark for Angola.

Yet, as highlighted in the analysis, compensation and cash transfer programs require several preconditions, including well-established administrative capacity. Lessons learned from several successful experiments suggest that such programs are likely to succeed if they are well prepared, well deployed, and well monitored. In the case of Angola, although the Kwenda program has provided support to a sizeable segment of the population, it has faced several obstacles. Many households in need are in remote areas, making them difficult to reach due to poor transport infrastructure. Added to this is the low literacy rate among beneficiaries and the lack of national identity cards in many households. Furthermore, markets and payment systems are absent in many rural areas, requiring innovative tools to overcome such obstacles.

Our analysis shows that Angola will have the fiscal space for compensation measures, provided that Our administrative capacity is in place and information and compensation are available and timely. simulation of the price shock through the IO for Angola shows that the pain points are concentrated in a handful of sectors that represent less than 10 percent of GDP but consume 53 percent of oil products. Chief among these sectors are fisheries, a key source of animal protein for the poor, and road transportation, with important and strong forward linkages to the rest of the economy. For the former, producer subsidy seems to be more appropriate. For the latter, cash transfers to households seem more adapted. Our simulations show that fully alleviating the price impact on fishing and transportation absorbs 30 percent of the savings generated from subsidy removal (around 1 - 1.5 percent of GDP). This can be considered the upper bound of any compensation package, regardless of the design of this package.

Finally, our analysis did not examine the important issue of the relationship between the business cycle and the pace of fuel subsidy reform. Here again, timing seems essential, not only to exploit low fossil 11