Items of Interest: June 7

Angolan ruling party and government budget preparations and sovereign currency developments in Zimbabwe are actions from June 7 that may emerge to become significant factors impacting geomarket developments in Africa.

Angola: In advance of an extraordinary congress scheduled for June 15, the Popular Movement for the Liberation of Angola (MPLA) approved by majority vote in the national assembly the government’s 2019 revised state budget. 

Significance: The 2019 state budget was revised downward by approximately 9% to reflect a crude oil reference price of $55 per barrel that was lowered from the originally proposed $68 per barrel due to volatility in global energy markets. The revised state budget was passed in anticipation of the João Lourenço-led Popular Movement for the Liberation of Angola ruling party convening on June 15 an extraordinary congress to debate and approve economic and policy reforms initiated since the president’s election as party leader in September 2018. Some party members, and notably the allies of former President José Eduardo dos Santos who’ve seen their fortunes collapse since Lourenço’s rise to power, will certainly take the opportunity to criticize the party president for the reforms they see as controversial. But restoring economic growth and investor confidence requires that the Angolan leader effect structural reforms that decentralize, de-politicize, and de-capture state-owned enterprises.  

Zimbabwe: President Emmerson Mnangagwa stated the government intends to reintroduce a sovereign currency.

Significance: The government of Zimbabwe abandoned the Zimbabwe dollar in 2009 following a decade of hyperinflation that reached one hundred trillion percent in 2008. A basket of foreign currencies has been used since, accompanied in 2016 by the introduction of electronic bond notes, and in early 2019 a pseudo currency called the RTGS dollar (popularly knowns as zollars). While some have called for Zimbabwe to adopt a foreign currency as its own (particularly the South African rand), the finance ministry has consistently advocated for the reintroduction of the Zimbabwe dollar before the end of 2019 so as to recover control of monetary and currency policy. The nation’s economy remains extremely fragile and foreign exchange is in very short supply, however, which undermines confidence that economic conditions have improved such that a local currency will be reintroduced.   

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