VENTURES AFRICA – African oil giant, Angola, is
planning to half its oil price benchmark in the 2015 budget due to the
sustained fall in global oil prices. According to the country’s finance
ministry, the cabinet has asked parliament to revise down the oil price
assumption to $40 per barrel from its earlier projection of $81 per
barrel.
The new benchmark would slash $14 billion from the budget, said a
statement by the finance ministry, which was obtained by Reuters on
Monday. The national assembly has until the end of next month to approve
the changes, but the measures are almost certain to be passed as the
country has no option than to overhaul its budget to deal with the
severe drop in expected revenue.
The fall in global oil prices has caused massive currency crises in Angola and Nigeria. Data source: oanda.com
Angola, Africa’s second largest oil exporter, has been hit hard by
the over 50 percent collapse in global oil prices. The once bubbling
economy is now having to deal with austerity measures because its growth
in the past decade has been almost entirely driven by oil
production. Another oil dependant and Africa’s largest producer —
Nigeria — is also struggling with the grossly depleted oil revenue. The
West African country, in December, cut its oil benchmark to $65 per
barrel, but in light of the further drop of oil prices, it may again
need to revise its benchmark.
The oil crisis has also triggered a currency crises in Angola and
Nigeria. Angola’s Kwanza fell to an all-time low on almost a daily basis
last month while the Naira, last week, touched down to the record low
of N210 to a dollar in the parallel market, almost 30 percent worse than
in January last year.
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