Return to: Index of "1994 Country Reports on Economic Practice and Trade Reports" ||
Index of "Economic and Business Issues" || Electronic Research Collections Index || ERC Homepage



                     Key Economic Indicators
        (Millions of U.S. dollars unless otherwise noted)

                                   1992        1993 1/   1994 2/

Income, Production and Employment:

Nominal GDP                       9,206       7,218       N/A
Real GDP Growth (pct.)              1.3       -23.8       N/A
Share by Sector:  (pct.)
  Agriculture                       6.9         6.1       N/A
  Extractive                       39.9        43.6       N/A
  Oil/lpg                          35.7        42.1       N/A
  Diamonds                          4.2         1.5       N/A
  Manufacturing                     1.5         1.9       N/A
  Construction                      4.0         2.8       N/A
  Services                         26.8        23.1       N/A
  Trade                            15.6        17.8       N/A
  Transport/Communications          1.9         2.2       N/A
  Import Duties                     3.3         2.4       N/A
Net Exports of Goods and Services  -961      -1,211       N/A
Nominal GDP Per Capita (USD)        868         661       N/A
Unemployment Rate (pct.) 3/        22.3         N/A       N/A

Money and Prices: 

Money Supply (M2)                 392.4       358.6       N/A
Base Interest Rate (pct.)          12.0        16.0       N/A
Retail Inflation (pct.) 3/        495.8     1,837.9   1,003.0
Consumer Price Index 3/           1,643      31,834    71,470
Exchange Rate:  (NKZ/USD) 4/
  Official (end of period)        550.0     6,500.3   410,000
  Parallel (end of period) 3/     6,900     106,000   610,000

Balance of Payments and Trade:

Total Exports (FOB)               3,833       2,831       N/A
  Exports to U.S. (CIF)           2,303       2,090     1,811
Total Imports (FOB)               1,988       1,415       N/A
  Imports from U.S. (FAS)           158         169       187
Aid from U.S.                        72         N/A        97
External Public Debt 5/           8,325       8,624       N/A
Debt Service Payments               504         583       N/A
Gold and Foreign Exch. Reserves   485.4       216.4       N/A
Trade Balance                     1,845       1,416       N/A
  Trade Balance with U.S.         2,145       1,921     1,624

N/A--Not available.
1/ Estimated and/or based on incomplete data.
2/ Estimate based on January-June data.
3/ Data for Luanda only.
4/ See Section 2 for exchange rate info; data as of 10/25.
5/ Medium- and long-term debt; excludes a portion of the oil
companies' debt and short-term commitments.

1.  General Policy Framework

    The Republic of Angola is potentially one of Africa's
wealthiest countries.  Relatively sparsely populated, it has
large hydrocarbon and mineral resources, huge hydroelectric
potential, and ample arable land.  Civil war between the
Government of Angola and the National Union for the Total
Independence of Angola (UNITA) from 1975 until May 1991, and
again from November 1992 until November 1994, has wreaked havoc.

    In addition to extreme disruptions caused by conflict, a
severe lack of managerial and technical talent has hampered
economic performance.  Misguided and ineffective attempts at
socialist economic planning and centralized decisionmaking
further hindered development.  Of the country's productive
sectors, only the oil sector, jointly run by foreign oil
companies and the state oil firm Sonangol, has remained
well-managed and prosperous.  Angola currently produces over
580,000 barrels per day of crude, accounting for the majority
of GDP, over 90 percent of exports, and over 80 percent of
government revenues.  The softening of world oil prices after
the Gulf War, and especially in late 1993 and early 1994, has
served to erode government export earnings at the same time
production has been increasing.

    Urban populations swollen by internally-displaced refugees
have subsisted largely on food aid or parallel markets.  The
rural population often carves out a living in marginal
security, surviving by subsistence farming.  Administrative
chaos, corruption, hyperinflation, and war have vitiated normal
economic activity and attempts at reform.  As a result of the
near-total absence of domestic production of nonoil products,
importation of food and other consumer items is lucrative
enough to attract traders from abroad.

    The government budget, perpetually in deficit from heavy
military and other non-productive spending, ballooned to 38% of
GDP in 1992 and 32% in 1993.  The deficit has been financed by
increasing the money supply and resorting to expensive,
oil-backed short-term lending.  Shortages, price controls,
hyperinflation, and erosion of confidence in the national
currency encourage parallel markets and widespread dependence
on barter or dollar transactions.

    The signature of the Lusaka Protocol on November 20, 1994
provides a hope that Angola may finally end the destructive
civil war and embark on the road to economic development.  The
Protocol calls for a UN-monitored cease-fire, the formation of
a unified army, and the demilitarization of UNITA forces.  In
return, UNITA will be given representation at every level of
government, from the local "commune" to the national Cabinet. 
Both the Angolan government and UNITA have asked for a strong
UN presence to oversee the implementation of the Protocol.

    The long-term effects of the war, the destruction of
infrastructure, and years of economic mismanagement remain to
be addressed.  The end of conflict should portend economic
stabilization and growth, but there appears to be little hope
for an immediate "peace dividend."  Reconstruction is likely to
be a long and arduous process, requiring significant inflows of
foreign assistance and investment.

    Since 1987, the government has launched various programs
aimed at privatization, liberalization, devaluation of the
kwanza, and new rigor in financial management.  Most of these
programs have enjoyed little implementation.  The government's
1994 Economic and Social Program has been favorably received by
donor nations and financial institutions, but its execution
remains largely undone.  

    The oil sector, the only functional part of the Angolan
economy managed by the government and largely isolated from the
civil war, has been the focus of U.S.-Angolan trade and
investment.  The U.S. bought about 74% of Angola's oil exports
in the first quarter of 1994, while equipment for the sector
accounts for much of U.S. sales to Angola.  Given the country's
huge potential, lasting peace and genuine economic
liberalization could provide substantial opportunities for U.S.
trade and investment in Angola, particularly in communications,
energy, and transportation sectors.

2.  Exchange Rate Policy

    From 1978 to September 1990, the government maintained the
official exchange rate for the kwanza, a non-convertible
currency, at 29 kwanzas/$.  The new kwanza (NKz) replaced the
kwanza at par in September 1990, and in March 1991, the
government devalued the new kwanza by 50%; further devaluations
brought the official rate to NKz550/$ by April 1992.  To narrow
the gap between that and a parallel market rate several times
higher, the government adopted a program of auctions in late
1992 and early 1993 that led to the devaluation of the currency
to NKz7000/$.  In March 1993, the government revalued the new
kwanza to NKz4000/$, but in October devalued to NKz6500/$.

    In 1994, the government began a program of foreign exchange
selling in which the Central Bank and commercial banks
participate.  The rate which results from "fixing" sessions is
utilized as a floating official rate.  By late October 1994,
that rate reached 410,000 kwanzas per dollar.  The parallel
rate, meanwhile, has risen to over 600,000 kwanzas per dollar. 
Exchange houses operate legally in Luanda and other cities. 
Rates close to the parallel rate can be obtained both in
exchange houses and in some banks in limited amounts.  The
government continues to declare its intention to bridge the gap
between official and parallel rates via further devaluations.

3.  Structural Policies

    Angola's economic policy remained in flux in 1994.  The
government has taken steps to reduce its role in the economy,
and has reduced or eliminated subsidies and controls of some
foodstuffs and other consumer products.  Nevertheless, it
continues to heavily subsidize fuel, public transport,
electricity and other utilities, and to regulate profit margins
on the sale of numerous products.

    During 1994, the government has focused on bringing down
inflation and taking measures to stabilize the budget deficit. 
While the government has publicly declared its desire for IMF
balance of payments assistance, the IMF has only agreed to
begin a monitoring program of Angolan performance.

4.  Debt Management Policies

    The government began substantial foreign borrowing only in
the early 1980's, principally to finance large oil sector
investments.  Prior to the 1986 slump in international oil
prices, the government scrupulously met its foreign debt
commitments, even those contracted prior to independence. 
Subsequently, however, large payment arrears, estimated by the
IMF to be over $4.2 billion at the end of 1993, have forced
major Western export credit agencies to suspend or highly
restrict cover to the country.

    Total foreign debt is now probably between $9 and $10
billion, and at the end of 1993 was 119% of GDP and 293% of
exports, according to the IMF.  Approximately half of the debt
is owed to the former Soviet Union and its former satellites
for military purchases between 1975 and 1991.  In 1989, Angola
joined the IMF and the World Bank, and was able to secure the
rescheduling of over $1.8 billion in Paris Club and other
debt.  Creditors rescheduled $669 million of Angolan debt in
1990, but only about $17 million in 1993.  The government has
admitted that it will be unable to lighten its debt burden,
further failing an agreement with the IMF on structural
adjustment of the economy.

5.  Significant Barriers to U.S. Exports

    Since the sharp decline of its coffee and diamond sectors,
Angola's ability to import has depended entirely on oil
earnings, and has been severely constrained by the diversion of
resources to defense spending since the return of hostilities
in late 1992.  The lack of customers with access to foreign
exchange, together with Angola's poor international financial
reputation, presents sizable challenges for U.S. suppliers of
goods and services.

    Import licenses are now routinely granted after the fact,
and are more easily obtained if no government allocation of
foreign exchange is involved.  Most products require import
licenses, but enforcement is lax.  State-owned firms in some
service industries have in the recent past attempted to keep
out foreign competition, sometimes with success.

    Angola is "off cover" for trade finance from the
Export-Import Bank of the U.S. (EXIM) because of the elevated
business risk in Angola and the country's extensive outstanding
arrears.  It is possible, however, that EXIM will consider
supporting specific projects.  The Overseas Private Investment
Corporation (OPIC) signed an Investment Incentive Agreement
with Angola in 1994.  OPIC lists Angola among the countries
where its investment finance and insurance programs are
generally available.  The U.S. Department of Agriculture (USDA)
made $8 million in agricultural export loan guarantees
available to Angola for the purchase of U.S. agricultural
products under the P.L. 480 Title I program in 1994.

    The U.S. government continues to prohibit the transfer of
U.S.-origin lethal material to all entities in Angola under the
"Triple Zero Clause" of the Bicesse Peace Accords and the
International Traffic in Arms Regulations, and to prohibit by
Executive Order, in accordance with UN sanctions enacted in
September, 1993, the transfer of all defense articles and
petroleum products to UNITA.  The U.S. government has lifted
the restriction on the private transfer of U.S.-origin
nonlethal defense articles to the Government of Angola, with a
presumption of approval of applications for export licenses for
such transfers.

    Foreign investment regulations enacted since the late
1980's have aimed at opening more sectors to foreign
investment, and at simplifying the process for potential
investors.  Regulations and the lack of execution of reforms
continue to prohibit or limit foreign investment in defense,
banking, public telecommunications, media, energy, and

6.  Export Subsidies Policies

    No export subsidy schemes currently exist, although among
the measures proposed but not yet implemented is a foreign
exchange retention scheme as an incentive for nonoil export

7.  Protection of U.S. Intellectual Property

    The Republic of Angola joined the World Intellectual
Property Organization in 1985, and acceded to the GATT in
1994.  To date, Angola has not adhered to any of the principal
international intellectual property rights conventions.

8.  Worker Rights

    a.  The Right of Association

    The 1991 constitution recognizes the right of Angolans to
form trade unions and to bargain collectively.  The law
governing unions has yet to be passed; free labor organizations
cannot yet affiliate with international labor bodies.  The
National Union of Angolan Workers (UNTA), the former official
union of the ruling MPLA, remains the principal worker
organization.  UNTA is affiliated with the Organization of
African Trade Union Unity and the formerly communist-dominated
World Federation of Trade Unions.

    b.  The Right to Organize and Bargain Collectively

    The constitution provides for the right to strike. 
Legislation passed in 1991 provides the legal framework to
strike, including prohibition of lockouts, protection of
nonstriking workers, and prohibition of worker occupation of
places of employment.  Strikes by military and police
personnel, prison workers, and firemen are prohibited.  The
Ministry of Labor and Social Security continues to set wages
and benefits on an annual basis.  Salaries for public servants
are set at the minister's discretion; salaries of parastatal
employees are based on profits of the previous year and
available loans from the Central Bank. 

    Angola has no export processing zones.

    c.  Prohibition of Forced or Compulsory Labor

    New legislation is still pending which prohibits forced
labor, reversing previous laws and provisions which had been
cited by the International Labor Organization (ILO) for
violation of Convention 105.  The previous legislation
permitted forced labor for breaches of discipline and
participation in strikes.

    d.  Minimum Age of Employment of Children

    The legal minimum age for employment in Angola is 14.  The
Inspector General of the Ministry of Labor is responsible for
enforcing labor laws.  Labor Ministry registration centers
screen out applicants under the age of 14.  However, children
at a much younger age work throughout the informal sector.

    e.  Acceptable Conditions of Work

    Formal wages in the state and private sector rarely surpass
the equivalent of $10 per month on the parallel market; many
workers earn less than $5 per month.  Most workers depend on
the informal sector, second jobs at night, subsistence farming,
theft, corruption, or overseas remittances to maintain an
acceptable standard of living.  The normal workweek is 37
hours.  There is no information on adequacy of work conditions
or health standards, but they are in most cases assumed not to
approach Western standards, given the extreme underdevelopment
of the Angolan economy and lack of enforcement mechanisms.

    f.  Rights in Sectors with U.S. Investment

    U.S. investment in Angola is concentrated in the petroleum
sector.  Workers in the oil sector earn salaries far greater
than those in almost every other sector of the Angolan
economy.  Workers in the petroleum sector enjoy the same rights
as those in other sectors of the Angolan economy.

  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
              Category                          Amount          

Petroleum                                             100
Total Manufacturing                                     0
  Food & Kindred Products                   0
  Chemicals and Allied Products             0
 Metals, Primary & Fabricated               0
  Machinery, except Electrical              0
  Electric & Electronic Equipment           0
  Transportation Equipment                  0
   Other Manufacturing                      0
Wholesale Trade                                         0
Banking                                                 0
Finance/Insurance/Real Estate                         (1)
Services                                              (2)
Other Industries                                        0
TOTAL ALL INDUSTRIES                                  (1)      

(1) Suppressed to avoid disclosing data of individual companies
(2) Less than $500,000
Source: U.S. Department of Commerce, Bureau of Economic


To the top of this page