Mass protests erupt in Angola following IMF-backed fuel subsidy removals
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Article summary
- Angolan government removes consumer fuel subsidies amidst high debt and tight fiscal pressures at behest of IMF and World Bank.
- Civil society warns that without wider debt relief, this simply shifts the burden onto the poor.
In late July, Angola saw mass protests after the government raised diesel prices by 33 per cent, as part of a programme of fuel subsidy cuts supported by the International Monetary Fund (IMF) and its sister organisation, the World Bank. According to global civil society organisation (CSO) Human Rights Watch, Angolan police responded with excessive force, resulting in at least 30 deaths and more than 1,500 arrests.
The IMF’s 2024 Article IV report (see Inside the Institutions, IMF Surveillance) said Angola needed to “return to a fiscal consolidation path”, arguing that subsidies are fiscally costly, crowd out essential social spending, and disproportionately benefit wealthier households. The Bank has similarly pushed subsidy cuts in Angola as a condition for its policy-based lending (see Inside the Institutions, Development Policy Financing).
Yet, as West Africa Weekly noted in August, “in Angola, where public transport, farming, and informal markets depend heavily on cheap fuel, the social cost of a sudden removal has been severe” – with transport costs alone raising by 55 per cent. This is particularly concerning given Angola’s unemployment stands at 14.5 per cent, inflation at 27.5 per cent, and wages remain stagnant.
Although the Fund and Bank have advocated for compensatory measures, such as the expansion of the Kwenda cash transfer to protect vulnerable households, CSOs have repeatedly highlighted the targeting and implementation flaws of such mitigation programmes (see Observer Spring 2024), with the Bank itself reporting limitations of the Kwenda system.
Catherine Mithia from African Network on Debt and Development (AFRODAD) argues, “While the IMF considers fuel subsidies a regressive policy instrument, it is a lifeline for half of Angola’s population that live on $2 a day. Removing the subsidy before the government implements much-needed social safety net programs for the most vulnerable populace is likely going to escalate further the unrest. The IMF must rethink this narrow policy approach that is fixated on creditor repayment and prioritise savings from the subsidies to fund critical sectors such as health and education which are already facing massive budgets cuts.”
Stranglehold of debt and austerity
Angola faces debt service obligations of approximately $58.6 billion this year, or 63 per cent of its GDP. The IMF’s 2024 Debt Sustainability Assessment (DSA) judged that debt was “expected to decline” but that Angola is still at high risk of distress, citing heavy foreign exchange risk exposure (with 80 per cent of debt in foreign currency) and dependence on volatile oil prices. Yet according to the DSA, this projected decline is expected from fiscal consolidation, with the authorities planning to continue subsidy reform and target savings of 2.1 per cent of GDP in the 2025 budget.
CSOs have criticised the Fund and Bank for avoiding “unsustainable” debt labels – which could trigger debt restructuring – and instead relying on fiscal consolidation to deliver growth (see Observer Autumn 2022). In practice, this typically means deep cuts to essential services and productive spending. In Angola, spending on social services has reduced by more than 55 per cent since 2015, according to UK-based CSO Debt Justice. Civil society has been calling for unconditional debt relief to create genuine fiscal space for social investment – rather than shifting the burden onto the poor through consumer subsidy removals, only for the savings to be diverted to debt repayment.
