Solutions of the Economic Problems of Angola

Oil production is profitable enough and it is used to decrease foreign debt and support the budget of the government. It is one of the most important areas of the economy. The fact that most of the production of Angola reinforces the oil companies tendency to extort the oil with really no connection with the domestic economy. This is a result of the maintenance of foreign oil companies. As for the extraction and production of diamonds the area is not physically isolated like with oil, but the process of production does not rely on big quantities of domestically produced inputs. All the money, taken from the selling of oil and diamonds, are spent on import. In difference from the time of war when the largest part of income was spent on weapons. As for some domestic products, the country does not have the possibilities for their production, so everything from food to clothes was imported from other countries. As a result the balance of payments was in deficit.

There were a lot of solutions proposed by the government. One of possible solutions was saving some money offshore or to pump the oil out at more sluggish rate. The first option is dangerous as there is too much influence on the government officials to pay out money when it becomes available. Even so, the government can reach the same effect if it uses the revenues to pay off the foreign debt. But still it did not happen, as the government was not interested in it. The situation did not change significantly and nowadays the country is in the same situation. It is not a unique case. It always happens with the countries where economic situation is the same.

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