Angola’s external accounts showed a surplus in the second quarter of 2025, but the figures mask a worrying trend of contraction that could signal deeper vulnerabilities in the country’s balance of payments.
According to the National Bank of Angola (BNA), the current account recorded a USD 294.4 million surplus, equivalent to 0.8% of GDP. While positive on the surface, the surplus represents a 45.4% decline compared to the previous quarter.
The Numbers Behind the Surplus
The BNA’s Note on External Statistics points to several factors behind the weaker current account. The goods account, the backbone of Angola’s external earnings, contracted by 8.6%, reflecting the economy’s exposure to fluctuations in oil exports. At the same time, the primary income account deteriorated sharply — falling by 90.7% — as payments to foreign investors and debt-related obligations climbed.
The services account provided a modest bright spot, with its deficit improving by 9.6%, while current transfersworsened slightly. Taken together, the dynamics underscore Angola’s continued dependence on oil exports to finance imports and its vulnerability to external pressures.
Capital Flows and Investment
The capital and financial account provided some relief, recording a USD 238.9 million surplus compared to a USD 955 million deficit in the first quarter. The improvement was largely attributed to stronger net direct investment flows, highlighting renewed investor appetite for Angola’s energy and non-oil sectors.
However, the overall net international investment position worsened by USD 638.9 million, driven by an increase in liabilities to non-residents. This signals that while investment inflows are welcome, they are also increasing Angola’s external obligations, raising questions about long-term sustainability.
A Cushion of Reserves
At the end of Q2 2025, Angola’s international reserves stood at USD 15.66 billion, enough to cover 8.8 months of imports of goods and services. This buffer remains a critical anchor for macroeconomic stability, especially as global oil prices remain volatile and external financing conditions tighten across emerging markets.
The reserves position suggests that Angola has room to manage short-term shocks, but sustaining it will depend on export performance and prudent debt management.
Structural Challenges Remain
The contraction in Angola’s current account surplus highlights several structural issues:
- Commodity dependence: Oil still dominates Angola’s goods account, leaving the country vulnerable to global price swings.
- High external obligations: Rising payments on debt and repatriated profits by foreign investors weigh heavily on the primary income account.
- Limited diversification: While investment flows are improving, the bulk still targets oil and gas, with limited progress in manufacturing or agriculture exports.
These dynamics underline the need for accelerated economic diversification. Building resilience in agriculture, mining, and services could reduce Angola’s reliance on oil exports and soften the impact of external shocks on the current account.
Implications for Policy and Investors
For policymakers, the Q2 data serve as a reminder of the delicate balance between attracting investment and managing external liabilities. Strengthening fiscal policy, deepening local capital markets, and maintaining investor confidence will be key to sustaining a manageable external position.
For investors, Angola’s improved capital flows reflect opportunities in a reforming economy, particularly in infrastructure, energy, and logistics. However, the worsening investment position suggests rising risks that must be carefully weighed. Transparency in debt management and consistency in reforms will be essential to maintaining appetite for Angolan assets.
Angola’s ability to sustain its external surplus will hinge on both oil market dynamics and its success in diversifying the economy. While international reserves provide a cushion, the sharp decline in the current account surplus points to vulnerabilities that cannot be ignored.
As Angola positions itself as an energy exporter and regional hub, balancing external sustainability with growth ambitions will be critical. The Q2 figures show that while progress has been made, structural reforms and diversification remain the only path to long-term resilience.
Source: Further Africa
