Angola Appoints New Bank Governor as Oil Slump Hits Economy – Bloomberg

Angola named former Finance Minister Jose Pedro De Morais as governor of the central bank, seeking to reassure markets as oil prices plummet.

Morais, 59, took over as head of the Banco Nacional de Angola from Jose De Lima Massano, Amelia Borja, media director at the bank, said on Friday by phone from the capital, Luanda, without providing more information. Massano, who was governor from October 2010, asked to resign, state-run news agency Angop reported yesterday, citing a government statement.

Oil prices have slumped by more than half since June, slashing revenue in Africa’s second-largest crude producer. That’s forced the government to reconsider construction projects and budget targets.

Morais, who was finance minister from 2002 to 2008, “is respected internationally” and “played an important role in designing Angola’s initial post-conflict economic policy,” Alex Vines, head of the Africa program at Chatham House in London, said in an e-mailed reply to questions. “His appointment is clearly aimed at reassuring the markets as oil prices fall and seriously impact Angola’s finances.”

The central bank has kept its benchmark interest rate unchanged since raising it to 9 percent in October. Inflation was 7.5 percent in November and is forecast by the bank to range between 7 percent and 9 percent this year.

Boom Period

Morais led the Finance Ministry during Angola’s boom period after the end of a 27-year civil war in 2002, when gross domestic product expanded an average of 9.8 percent annually until 2008, fueled by record oil prices.

His appointment “could be construed as an implicit acknowledgment by the Angolan executive that some tough decisions will need to be made vis-a-vis monetary policy in the coming months, and that Morais is the man with the constitution to implement them,” Lucy Corkin, author of the 2013 book “Uncovering African Agency: Angola’s Management of China’s Credit Lines,” said by e-mail from Johannesburg.

Angola depends on oil for about 45 percent of GDP and three-quarters of its tax income. Falling revenues have prompted President Jose Eduardo dos Santos’s government to cut education spending, propose revising the 2015 budget and delay investment on construction projects.

The current budget projects a deficit of 7.6 percent of GDP using an oil-price benchmark estimate of $81 per barrel.

via Angola Appoints New Bank Governor as Oil Slump Hits Economy – Bloomberg.

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