Angola could spend as much as 3.8 trillion kwanzas ($4.16 billion) on fuel subsidies this year, almost twice its initial projection of less than 2 trillion kwanzas ($2.19 billion), a senior finance official told Reuters on Friday.

The increase underscores the mounting pressure on the public finances of the oil-producing country. Rising global energy prices, driven by the ongoing conflict in the Middle East, are increasing the cost of maintaining low domestic fuel prices. 

As a result, the growing subsidy bill is putting additional pressure on the government to expedite the gradual removal of subsidies, a process that began in 2023.

However, authorities are cautious about moving too quickly because of the potential economic and social consequences, Ottoniel dos Santos, Angola's secretary of state for finance and the treasury, told media.

During the annual meetings of the International Monetary Fund and World Bank in Bangkok, dos Santos emphasized that Angola needed to combine subsidy reforms with steps to diversify its economy.

He said the government was taking a gradual approach but could accelerate the process if the impact on vulnerable populations proved less severe than anticipated.

Angola now expects oil prices to average around $90 per barrel by the end of the year, well above the $61 benchmark used in its 2026 budget.

Although the government has yet to submit its 2027 budget, which is due at the end of this month, dos Santos said its oil price assumption would remain broadly in line with the International Monetary Fund's forecast of $71.50 per barrel.

The government anticipates crude oil production will reach 1.045 million barrels per day in 2027, matching the expected output for this year.