20100803
reuters

LUANDA (Reuters) - Angola's government sharply cut its estimate for 2010 economic growth to 6.7 percent from a previous forecast of 9.7 percent, in a revised budget submitted to parliament on Tuesday.

The oil-exporting nation did not explain the reduction but analysts said it could be linked to the government's statement last month that it owed $9 billion in unpaid bills to foreign construction companies.

"Some of these companies will cut back on their investments and that may hurt economic growth," said Alves da Rocha, an economics professor at Luanda's Catholic University.

The government said last month it planned to settle its arrears with small and medium sized construction companies this year and pay back bigger groups in one or two years.

The revised budget increased spending by 31 percent to 4.05 trillion kwanza, based on an average oil price of $65.32 per barrel, up from $58 per barrel used in the initial budget released late last year.

Angola's minister of state Carlos Feijo told parliament more than one-third of the budget was focused on improving the lives of ordinary Angolans, by investing in agriculture, education and healthcare, but did not go into further detail.

Angola expects oil output this year to reach 1.906 million barrels of oil per day (bpd) -- above its OPEC quota of 1.52 million bpd.

Higher oil revenues were expected to decrease Angola's fiscal deficit to 2.7 percent of GDP from the 2.9 percent previously estimated, according to the revised budget document seen by Reuters.

The document added Angola's oil sector was expected to grow 5.4 percent this year from negative reading of 5.1 percent last year while the non-oil sector was seen expanding 7.5 percent, down from 8.9 percent in last year.

Total government debt this year is seen rising by $3.2 billion to $31.5 billion, or 39.7 percent of Angola's gross domestic product.