Angola ends subsidies on gasoline to reduce inequality

gasoline (1)

Angola will end subsidies on gasoline and increase the price of other fuels from Sept. 30 to ease the burden on the Treasury and release more funds for public spending, according to a statement by the Angolan finance ministry.

Petrol subsidies will end and the price of other fuels will increase. Angola imports most of its fuel due to insufficient refining capacity and it spent around 4 percent of its 2013 budget on fuel subsidies, according to Control Risks.

“Gasoline now joins the free price system, ending the burden on the state of the cost of subsidies,” a ministry statement seen by Reuters said, adding that the changes come into effect on September 30.

“The ongoing effort to adopt realistic prices will help strengthen social programmes and reduce inequality, since subsidies benefit the most favoured groups and encourage fuel smuggling to neighbouring countries.”, it added.

Angola has been gradually increasing fuel prices in recent months and has saved 110 billion kwanza ($1 billion) from reduced subsidies since October last year, the statement said.

The International Monetary Fund, which entered a $1.4 billion loan deal with Angola in 2009, has urged the southern African country to reduce fuel subsidies to free spending for infrastructure and encourage the building of refineries.

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