Background

Unpredictability in both the oil production environment as well as the price of oil means "public expenditure growth needs to be set in a medium-term context to avoid the boom and bust cycles that have undermined stability and development in some other oil-producing countries," the report said.

Rising oil production pushed GDP up 18% last year, while oil output exceeded 1.4 billion barrels per day. Projections put oil production at more than 2 million barrels per day for 2007.

Angola is trying to rebuild its economy four years after the end of civil war that lasted for 27 years. Most people survive on less than $2 a day.

"The climate for doing business in Angola whether for residents or foreign companies is still considered one of the least conducive in the world,