Sun sets on Angolan dream for Portuguese expats

The Angolan government, reliant on oil for 70 percent of its budget, has put the brakes on public spending, stopping thousands of building projects. (AFP)
Updated 29 January 2017
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Sun sets on Angolan dream for Portuguese expats

LISBON: When Portugal was suffering in the depths of the global financial crisis, Marina Pereira followed thousands of her compatriots and took a job in Angola as it rode the wave of an oil boom.
But now the collapse in global crude prices has hammered the southwest African country’s economy and sent Pereira and many others like her heading back to Europe.
“At the start I was earning 4,200 euros ($4,500) a month working in a spa. I was housed and fed, it was paradise,” the 33-year-old osteopath said.
In 2012, she had moved to Luanda, capital of the former Portuguese colony, rich in oil and diamonds. But after a dream start, euphoria began to give way to disillusion.
“I started to be paid in kwanzas, the local currency, and my monthly income dropped to 1,000 euros. You can only change money on the black market, at a really bad rate,” she said, eventually leaving as the cost of living got too high.
Her return in 2015 to Portugal, then barely out of a deep recession, was a brutal experience. On a wage of 650 euros a month for working in a gym, she said that “it is not enough to have a decent quality of life.”
Some 300,000 Portuguese colonists fled Angola as violence flared in the run-up to independence in 1975. Forty years later, Portugal is witnessing a new wave of “retornados” — returnees — leaving the African nation as it wrestles with its own economic woes.
The exodus began in 2015 and is still going on, according to Paulo Vieira, president of the Portuguese-Angolan chamber of commerce.
The end of Angola’s bloody 27-year civil war in 2002, combined with high global oil prices, unleashed rapid development, with Luanda often compared to a new Dubai.
GDP growth peaked at over 20 percent in 2007, but the decline in oil prices, poor governance and lack of investment have seen growth collapse to less than two percent last year.
Although Angola remains Africa’s biggest oil producer alongside Nigeria, revenues have halved.
The Angolan government, reliant on oil for 70 percent of its budget, has put the brakes on public spending, stopping thousands of building projects and imposed currency restrictions, hitting the construction industry.
“Several Portuguese companies in Angola can no longer pay their staff because they are having problems repatriating profits,” said Ricardo Pedro Gomes, president of Portugal’s construction industry association.
“Of the 100,000 Portuguese construction workers in Angola before the economic crisis, there are only a few thousand left. And there are salary delays going back up to a year,” construction union leader Albano Ribeiro said.
Pedro Dias, 42, a salesman for an Angolan electronics company, saw his friends leave, one by one, before returning to Portugal himself as well.
In Luanda, he was paid up to 3,000 euros a month and the company paid for his accommodation, car and food — a good income to support his wife and three children back home.
But with the currency restrictions, bank transfers to Portugal have stopped.
“I had to leave, my family have to eat,” he said, his eyes hidden behind dark sunglasses.
Dias says he still misses Angola.
“If the situation improves, I will go back,” he says, recalling “the smell of Africa and the savannah.”
Expat life in Luanda is full of pitfalls and politics is off-limits in a country ruled by President Jose Eduardo dos Santos for some 37 years.
“You never talk about the Angolan regime in public,” Dias says.
“If you want to avoid problems you must not get involved in politics.”
And Pereira tells of being attacked in broad daylight “with a gun pointed at my head by 10 or 11 year-old children” and almost dying after catching malaria and yellow fever.
Despite these hair-raising experiences, Pereira says she misses her old life, and is already planning to move to another former Portuguese colony, Sao Tome and Principe.
“It is a love-hate relationship, I have always been fascinated by Africa,” she says, remembering the “wonderful beaches” and “the smell of damp earth.”


Pakistani central bank lifts interest rate as inflation bites

Updated 58 min 23 sec ago
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Pakistani central bank lifts interest rate as inflation bites

ISLAMABAD: Pakistan’s central bank raised its key interest rate to 12.25% on Monday, warning that already soaring inflation risked further rises on the back of higher oil prices and reforms required for a bailout from the International Monetary Fund.
The 150 basis points increase follows a preliminary agreement last week with the IMF for a $6 billion loan that is expected to come with tough conditions, including raising more tax revenues and putting up gas and power prices. It was the eighth time the central bank has increased its main policy rate since the start of last year.
With economic growth set to slow to 2.9% this year from 5.2% last year, according to IMF forecasts, the rate rise adds to pressure on Prime Minister Imran Khan, who came to power last year facing a balance of payments crisis that has now forced his government to turn to the IMF.
Higher prices for basic essentials including food and energy has already stirred public anger but the central bank suggested there was little prospect of any immediate improvement.
Noting average headline inflation rose to 7% in the July-April period from 3.8 percent a year earlier, the central bank said recent rises in domestic oil prices and the cost of food suggested that “inflationary pressures are likely to continue for some time.”

 

It said it expected headline inflation to average between 6.5% and 7.5% for the financial year to the end of June and was expected to be “considerably higher” in the coming year. Expected tax measures in next month’s budget as well as higher gas and power prices and volatility in international oil prices could push inflation up further, it said.
It said the fiscal deficit, which the IMF expects to reach 7.2% of gross domestic product (GDP) this year, was likely to have been “considerably higher” during the July-March period than in the same period a year earlier due to shortfalls in revenue collection, higher interest payments and security costs.
Despite some improvements, financing the current account deficit remained “challenging” and foreign exchange reserves of $8.8 billion were below standard adequacy levels at less than the equivalent of three months of imports.
The central bank said it was watching foreign exchange markets closely and was prepared to take action to curb “unwarranted” volatility, after the sharp fall in the rupee over recent days that saw the currency touch a record low of 150 against the US dollar.
Details of what Pakistan will be required to do under the IMF agreement, which must still be approved by the Fund’s board, have not been announced but already opposition parties are planning protests.
As well as higher energy prices that will hit households hard, there are also expectations of new taxes and spending cuts in next month’s budget to reach a primary budget deficit — excluding interest payments — of 0.6% of GDP.
With the IMF forecasting a primary deficit of 2.2% for the coming financial year, that implies squeezing roughly $5 billion in extra revenues from Pakistan’s $315 billion economy, which has long suffered from problems raising tax revenue.

FACTOID

Pakistan’s economic growth is set to slow to 2.9% this year.