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Table 3: 2011 Budget and Q1 income/expenditure outcome
2011 2010
Original budget
AKZm
Original Budget
US$m
Original budget
AKZm
Original Budget
US$m % change
Total revenue AKZ 4,172,418 US$ 45,352 AKZ 3,075,200 US$ 33,067 -27%
Total expenses (AKZ 4,172,418) (US$ 45,352) (AKZ 3,075,200) (US$ 33,067) -27%
Budget surplus/(deficit AKZ 0 US$ 0 AKZ 0 US$ 0
Revenue Overview Budget 2011 Revenues realised for Q1 2011 % realised
Recurrent Revenues A B B/A
Petroleum Sector AKZ 2,403,340 US$ 26,123 AKZ 666,446 $7,244 28%
Diamond sector AKZ 11,045 US$ 120 AKZ 1,856 $20 17%
Other recurrent revenues AKZ 986,800 US$ 10,726 AKZ 170,813 $1,857 17%
Capital revenues
Disposals AKZ 3,176 US$ 35 AKZ 321 $3 10%
Financing AKZ 765,225 US$ 8,318 AKZ 100,237 $1,090 13%
Capital transfers AKZ 2,833 US$ 31 AKZ 0 $0 0%
Total Revenues AKZ 4,172,418 US$ 45,352 AKZ 939,672 US$ 10,214 23%
Expenses Overview Budget 2011 Expenses for Q1 2011
% realised
Recurrent Revenues A B B/A
Salaries and Wages AKZ 923,649 US$ 10,040 AKZ 178,459 US$ 1,940 19%
Goods AKZ 207,033 US$ 2,250 AKZ 24,050 US$ 261 12%
Services AKZ 507,744 US$ 5,519 AKZ 57,644 US$ 627 11%
Interest on debt AKZ 72,436 US$ 787 AKZ 24,774 US$ 269 34%
Subsidies and other Transfers AKZ 557,494 US$ 6,060 AKZ 41,889 US$ 455 8%
Repayments AKZ 0 US$ 0 AKZ 0 US$ 0
Capital revenues
Investments AKZ 823,706 US$ 8,953 AKZ 101,014 US$ 1,098 12%
Transfers of capital AKZ 11,591 US$ 126 AKZ 4,380 US$ 48 38%
Capital transfers AKZ 46,282 US$ 503 AKZ 4,071 US$ 44 9%
Repayment of financial liabilities AKZ 1,002,479 US$ 10,897 AKZ 44,524 US$ 484 4%
Other capital expenses AKZ 4 US$ 0 AKZ 0 US$ 0 0%
Budgetary reserve AKZ 20,000 US$ 217 AKZ 0 US$ 0 0%
Total Revenues AKZ 4,172,418 US$ 45,352 AKZ 480,805 US$ 5,226 12%
Budget Surplus/(Deficit) AKZ 0 US$ 0 AKZ 458,867 US$ 4,988
Source: Ministry of Finance
Monetary Policy
In recent years, The BNA has maintained a “strong kwanza” policy, involving intervention in the foreign exchange
market to keep the currency stable against the US dollar. Since 2006 a managed float of the currency saw the
exchange rate oscillating in a tight band, around AKZ75: US$1 mark. This reduced inflation significantly from nearly
430% in mid-2000 to the low double digit figures. With the demise of oil revenues during the 2008 commodities
crash, panic struck the market, resulting in a massive externalisation of hard currencies. In a bid to maintain their
„strong Kwanza‟ policy, the central bank spent in excess of US$ 6bn trying to maintain the local currency.
Inevitably, in Q4 2009 the Kwanza lost about a quarter of its value, significantly impacting confidence in the local
currency, and causing a liquidity crunch in the local banking sector. With the banks heavily invested into an illiquid
real estate market, several players suffered a contraction in net assets. The tighter environment also unveiled
several regulatory weaknesses and a massive internal fraud was unveiled at the central bank and finance ministries,
which resulted in the replacement of the central bank governor and finance minister in 2010.
Post the crunch, oil prices have rebounded and liquidity is beginning to return to the market. The BNA has rebuilt its
foreign reserve buffer to an all-time high of over US$22b.6n, from a low of some US$12bn at the height of the crash.
In line with the rebound in oil fortunes, a fiscal surplus of US$5bn was recorded for the first quarter of 2011.
The currency has found a new mean at circa AKZ93: US$1 and stability has returned to the market. Of the US$6.8bn
in arrears to the private sector (mostly construction related), the government had still to pay just over US$2.7bn by
July 2011. Weaknesses in the control environment were revealed where transfer pricing and fictitious invoicing was
widely being used to expropriate revenues from the state, and an intensive exercise was carried out by the ministry
of finance to audit all payments and assess their creditworthiness. New procurement and payment systems have
now been rolled out across all ministries and quarterly expenditure ceilings have now been imposed to ensure that
there is greater control of the expenditure cycle.
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