IBERSOL | 2019 Annual Report

 The Situation in Angola Recent figures from BPI RESEARCH indicate that the Angolan eco- nomy contracted 1.1% in 2019, postponing the recovery for a fourth consecutive year. The economic performance was strongly conditioned by the fragili- ty of the oil sector, in a year in which average daily output dropped by 7.7%, to an average of 1.36 million daily barrels. The average pri- ce of the oil barrel fell 10.9% in 2019 to 63 dollars, contributing to a decrease in export earnings of 17.8% and of 15.8% in tax revenue. The Strategy of the National Oil and Gas Agency (ANPG) has been to auction 50 new blocks for oil drilling until 2025, nine of which in 2020, including three in the Congo and three in the Cuanza basins. The fall in oil production and prices and the limited availability of foreign reserves led to a considerable depreciation of the Kwanza in 2019. In 2020-2021 the Kwanza is expected to continue to lose value, but at a slower rate. Despite a drop until the end of 2019, inflation is expected to increa- se in 2020 due to the impact of the devaluation of the currency, the introduction of VAT, price increases of some merchandise and the withdrawal of subsidies for oil and derivatives. The Government has been meeting the structural and economic challenges of the country head on. The agreement reached with the IMF and the World Bank is a good example of a strategy aimed at promoting more inclusive growth and improving governance. It includes a more flexible exchange policy, tax consolidation measu- res (elimination of fuel subsidies, implementation of VAT, among others) as well as measures aimed at improving the health and banking sectors. Some strategic investments, such as the begin- ning of construction of a tram system in Luanda and the installa- tion of an automobile assembly unit in the Luanda-Bengo Special Economic Zone (ZEE) are being negotiated and planned. However, some significant risks remain, that could condition the growth of 12