Thread by @JMCerdeira

🇦🇴Last 3 weeks in the Angolan economy (I was on vacations for a week 😅)

1. 📈Q1 economic sentiment improved, rising for the 5th quarter in a row.

Almost all sectors recorded quarterly and year on year increases, with the exception of 🏪Retail (-4 against Q4 2021).

#Angola

🚍Transport sector again showed the largest yoy growth (+37 pts), followed by Tourism (+23pts), consistent with the trend of more relaxed anti-Covid measures in Angola.

Pieces of news reporting more buses have been a constant, by the way.

rna.ao/rna.ao/2022/04…

2.🛢️TotalEnergies divulged a positive Final Investment Decision on CLOV Phase 3, a development in Block 17 (largest producing block in Angola) which could yield additional production of 0,03 million barrels per day.

It's small but it adds up to other recent projects in Block 17

like CLOV 2 and Zinia 2, rising output towards 0.40 mbd this year.

The oil concessions agency also allowed a share of facilities between Block 17 and 17/06, which should turn Begónia field production viable, another 0.03 mbd to come online in 2026/27.

expansao.co.ao/economia/inter…

3. One small privatization completed (almost), one large postponed (and potentially improved?).

A small chain of state-owned supermarket stores was privatized - 15 of 24 stores were allocated to 3 local buyers, and the remaining 9 will be the auctioned.

angola24horas.com/sociedade/item…

🧐However, the state-owned insurer ENSA saw its privatization process canceled while in the final negotiation stage.

💸The Government alleges it could get more money for the asset, and says it will do an IPO💱, probably encouraged by BAI bank's successful operation.

4. Inflation decreased again, the monthly print at 0.93% in May, the lowest since 2015.

The Kwanza appreciation and some Gov help in purchase of agricultural goods (local farmers not very happy so far, btw) are taming price rises. 🥫Food prices were up 0.79%, below headline.

5. Oil exports seem broadly stable, albeit some signs of increase from production numbers sourced by OPEC - but hey, stable is great, output has been steadily decreasing since 2016.😅

OPEC May numbers at 1.18 mbd, highest since Nov 2020.

And prices sure are helping tax revenue!

6. Current account showed a USD 4.7 bn surplus in Q1 2022, the highest in at least 10 years (could not find quarterly data before 2012, actually).

📈So exports are the main driver here - up 80.1% yoy, totalling USD 12.6bn, highest since Q3 2014.

Crude exports up 66.5%⬆️⬆️⬆️

LNG exports almost tripled (!!!) - price, price, price! - amounting to USD 1.7bn, the highest ever.🚢 Refined oil goods also up about 60%, through higher prices.

But imports increased much less: +50.8% (goods); +54.5% (services), both returning to levels similar to 2019.🚕🚜🏗️

The deficit in the income balance also grew USD 0.8 bn, with larger outflows of dividends.

For the entire year, a surplus upwards from USD 12bn sounds reasonable, representing 8-9% of GDP.

And while debt payments are up from automatic mechanisms, reserves should still increase.

7. 📉First piece of relevant bad news: Angolan Eurobonds are down a lot, but so are all other emerging sovereings - can't escape rising interest rates from the Fed.

Example: the '28 Eurobond traded at 10.6% on June 20, compared to 7.0% a year earlier. Of these 360 basis points,

105 were an increase in spread vs the US Treasuries (perceived risk), but the rest were just a rise in the US benchmark.🙄

To compare, in the case of the other oil African major, Nigeria, spreads against US debt increased between 278-479bp.😰

⏱️Good timing on the April Eurobond

8. Monthly transfers abroad limit at exchanges increased from 2k to 5k, in a decision seemingly close in timing to a meeting by a Western Union representative with BNA head Massano.

Another sign of a stabilizing FX regime, something quite unlikely before.
visao.sapo.pt/atualidade/mun…

9. The Kwenda programme - a cash transfer for low-income people supported by the World Bank - is accelerating significantly after 3 years of very slow progress.

The programme plans to support around 5 million people, with monthly transfers of AOA 8,500.

It is a low amount, but in rural Angola, it seems to make a difference.

It seems optimistic to believe it, but I head from news reports, WB personnel, and non-related people contacting with rural provices stating that it is leading to small investments

jornaldeangola.ao/ao/noticias/kw…

construction, and an increase in "small" economic activity in various areas.🍊🍰🚧

The question here for me is not this programme, but it's the sucess that could lead to a kind of Bolsa Família programme in Angola, the first sign of real redistribution of wealth by the State.🧱

10. Finally, the exchange rate: after some period of correction, through a bout of depreciation, a stronger presence of the Ministry of Finance seems to be leading to a more balanced market, and the Kwanza might have found an equilibrium between USD 410-435.

Early to tell.🔮