Angola Social Protection Public Expenditure Public Disclosure Authorized Review (PER) Public Disclosure Authorized Main Report June 21, 2018 Public Disclosure Authorized Vice President: Makhtar Diop Country Director: Elisabeth Huybens Practice Manager: Jehan Arulpragasam Task Team Leaders: Andrea Vermehren/Emma Monsalve Montiel Public Disclosure Authorized 0 CONTENTS Acknowledgments .......................................................................................................................................... i Acronyms ...................................................................................................................................................... ii Executive Summary ...................................................................................................................................... v Chapter 1 Country Context ..................................................................................................................... vii Chapter 2: Social protection spending trends and composition ............................................................. xiv Chapter 3: Pensions ................................................................................................................................. xx Chapter 4: Social safety net programs .................................................................................................. xxv Conclusion ............................................................................................................................................ xxx Chapter 1 Country Context ........................................................................................................................... 1 Macro and Fiscal Performance ................................................................................................................. 1 Fiscal Context ........................................................................................................................................... 3 Social Outcomes ....................................................................................................................................... 6 Chapter 2: Social Protection Spending Trends and Composition ............................................................... 16 Overview of Angola’s Social Protection System and Institutional Arrangements ................................. 17 Overall Social Protection Spending and its Evolution ............................................................................ 22 Composition of Social Protection Spending ........................................................................................... 25 Chapter 3: Pensions ..................................................................................................................................... 38 Overall .................................................................................................................................................... 38 Demographics and Coverage .................................................................................................................. 40 Benefit Levels ......................................................................................................................................... 43 Financial Performance ............................................................................................................................ 48 Projections of Fiscal Sustainability and Benefit Levels of the INSS Pension Scheme under Existing Parameters ............................................................................................................................................... 50 Conclusions ............................................................................................................................................. 54 Chapter 4: Social safety net programs ........................................................................................................ 56 Overall .................................................................................................................................................... 56 Integrated Program for Local Development and Combating Poverty (Programa Integrado de Desenvolvimento Local e Combate à Pobreza,PIDLCP) 2018-2022. .................................................... 58 Non-War Related Programs .................................................................................................................... 58 War-Related Programs (Non-contributory) ............................................................................................ 73 New Safety Net Programs ....................................................................................................................... 75 Conclusions ............................................................................................................................................. 76 References ................................................................................................................................................... 79 Annexes ...................................................................................................................................................... 82 1 Annex 1: Selected human development indicators, Angola and country comparator groups, 2016 or latest ................................................................................................................................................................ 82 Annex 2: General Description of Prost Methodology............................................................................. 84 Annex 3: Glossary of pension terms ....................................................................................................... 87 Annex 4: Social Safety Net Programs in Angola – Basic Information ................................................... 89 Annex 5: Ministries involved in the Social Protection Sector ................................................................ 92 Annex 6: Social Assistance Spending by Main Programs (million Kz) ................................................. 94 Annex 7: Number of Beneficiaries of Main Social Assistance Programs - MASFAMU ....................... 97 2 FIGURES, TABLES, AND BOXES Figure 0. 1: Rapid GDP per capita annual growth which slowed down after the global crisis .................... xi Figure 0. 2: Angola’s national poverty rate is significantly higher in rural areas ....................................... xii Figure 0. 3: Angola’s international poverty headcount is high and above several country comparators ... xii Figure 0. 4: Angola has the highest infant and child mortality rates in the world ..................................... xiii Figure 0. 5: General public services, economic affairs, defense and social protection take up the bulk of total government spending .......................................................................... Error! Bookmark not defined. Figure 0. 6: Angola’s public spending as % of GDP below other country comparator groups (2016)Error! Bookmark not defined. Figure 0. 7: Social protection spending as % of GDP decreased mainly due to reduced energy subsidies xv Figure 0. 8: Social protection spending disproportionally benefit the elderly in 2016 .............................. xvi Figure 0. 9: Declining energy subsidies as % of GDP and oil price ......................................................... xvii Figure 0. 10: Social insurance spending in Angola is above the Afr. regional average .......................... xviii Figure 0. 11: Social assistance spending decreased in non-war related assistance decreased the most in 2010-2016 (% of GDP) .............................................................................................................................. xix Figure 0. 12: Social assistance spending as % of GDP in Angola well below other country group’s spending ................................................................................................................................................................... xix Figure 0. 13: Slow growth of number of insured ....................................................................................... xxi Figure 0. 14: Growing number of pensioners ............................................................................................ xxi Figure 0. 15: Old Age benefit level three times that of survivors ............................................................. xxii Figure 0. 16: Total contributions are greater than spending on benefits but gap is reducing .................. xxiii Figure 0. 17: Projected INSS deficit is expected by 2050 ....................................................................... xxiv Figure 0. 18: Angola has 27 social safety net programs .......................................................................... xxvi Figure 0. 19: The total number of programs is well above the Africa region average. ........................... xxvi Figure 0. 20: Several small social assistance programs but little budget allocation (2016) ................... xxviii Figure 0. 22: Low disbursement rate of Cartão Kikuia 2014-2016 ......................................................... xxix Figure 1: Angola’s GDP per capita in 2016 among the highest in the AFR regionError! Bookmark not defined. Figure 2: Rapid GDP per capita annual growth but which slowed down after the global crisis ......... Error! Bookmark not defined. Figure 3: Angola’s national poverty rate is