LISBON (Reuters) - Angola's parliament on Tuesday approved the main guidelines of a 2013 budget that the government says will boost public spending by over a quarter to help diversify the economy and improve social conditions.
President Jose Eduardo dos Santos' MPLA party pushed the bill through parliament, but opponents criticised the ongoing weight of security spending and observers alerted to the risks of the expanionist budget on inflation targets.
"The makeup of spending reflects the priority given to augmenting economic and social infrastructures to raise production and to the population's well-being," Finance Minister Carlos Alberto Lopes said in comments to state TV TPA.
Public spending, excluding debt repayments, is set to rise by 26 percent to 4.98 trillion kwanzas (around $52.1 billion).
Dos Santos, who in August won an election that gave him a new five-year term to extend his 33 years in power, has pledged to diversify the economy of Africa's second-largest oil producer away from oil.
The President says that in order to do so the country needs to continue rebuilding infrastructure destroyed during a 27-year civil war which the MPLA won against rebel group UNITA in 2002.
Public investment - mainly construction and the renovation of infrastructure - is budgeted to soar almost 60 percent to 1.64 trillion kwanzas (around $17.2 billion) this year.
Dos Santos has also pledged to improve the distribution of riches in a country where many say they have been left behind while an elite accumulates wealth during an oil-backed boom.
The MPLA says the most important element of the budget is the attribution of a third of total spending to education, health, social welfare and housing.
UNITA, now the main opposition party, abstained in the vote but its leader Raul Danda questioned why, after 11 years of peace, health services receive only 5 percent of total spending while defence and security services receive 17 percent.
The budget forecasts GDP growth of 7.1 percent this year thanks to an expected rise in crude output and an estimate of oil prices at $96 per barrel.
Still, fiscal revenues are set to slip slightly due to a fall in an unitemised "other revenues" entry. Combined with the jump in spending, this will lead to a fiscal deficit of 3.4 pct this year, compared to a surplus of 8.7 percent in 2012.
To help balance the budget, the government plans to issue around $18 billion in domestic and overseas debt. As a result, public debt is expected to reach just over $39 billion this year, from $33 billion at the end of the third quarter of 2012.
Carlos Rosado Carvalho, an economist at Luanda's Catholic said Angola's low level of public indebtedness - around 30 percent of GDP - offers room for manoeuvre.
"The main threat of the budget's expansionist policy to macroeconomic stability is probably inflation, which presents a huge challenge for monetary authorities" he said in an editorial for business paper Expansao.
The central bank has identified curbing price increases as its main goal. The government seeks to brake inflation to 9 percent this year after reaching a target of bringing inflation down to single digits in 2012.
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