* Angola slashes budget, borrows heavily on lower oil
* Poor criticise president in deeply unequal country
* Currency plunges, piling on costs of imports
* Many Angolans happy with peace after decades of war
By Joe Brock
LUANDA, May 20 (Reuters) - A halving of oil prices last year has increased hardship in Angola, one of the world's most unequal countries, and stirred resentment towards President Eduardo dos Santos, the leader of Africa's second largest crude exporter for the last 36 years.
Angola's government, which relies on oil sales for 95 percent of foreign exchange revenues, slashed a third off its budget after a glut in global production caused a halving of oil prices last year.
Dos Santos' government ended petrol subsidies last month to release the burden on the Treasury, a move supported by economists but resented by the poor who felt the effects of a 30 percent rise in fuel prices.
The central bank also restricted dollar sales as foreign exchange supplies dried up, prompting a sharp decline in the kwanza currency, ramping up costs in a country that relies on imports for 80 percent of consumer goods.
The kwanza is trading at 170 against the dollar on the street, compared with 109 officially.
"The government treats us like dogs," said Claude Ambrosio, 29, swatting flies swarming around the dried fish she sells at her a rundown market in Vianna, one of Luanda's poorest suburbs.
"The price of everything went up but we get no help. There are no schools, no hospitals and you can see how we live," Ambrosio said, pointing to crumbling shacks and piles of rotting rubbish.
Annual growth in Africa's third largest economy has averaged around 10 percent as the country rebuilt after a 27-year civil war ended in 2002 but the IMF predicts growth will fall to 4.5 percent this year and 3.9 percent in 2016.
MEMORIES OF WAR
Painful memories of the war and the best funded security forces in Africa have stemmed any major civil unrest in Angola over the last decade, although more recently there have been signs of public anti-government sentiment.
In the central Huambo province, an opposition stronghold, police and soldiers fought with an anti-authority Christian sect last month.
The government said 13 sect members and 9 police officers died in the clashes; opponents said hundreds of civilians were killed in an effort to crush dissent. Neither account could be verified because police cordoned off the area for two weeks after the clashes.
A series of protests in the capital Luanda were cancelled last month after warnings of a police crackdown, human rights activists told Reuters.
Dos Santos' opponents say he uses the powerful military, which takes the biggest slice of the budget, to maintain power.
Opponents also accuse him of using oil funds to enrich his friends and family.
Dos Santos' billionaire investor daughter Isabel is Africa's wealthiest woman and his 36-year-old son Jose was made the head of a $5 billion sovereign wealth fund in 2013.
Dos Santos denies accusations of nepotism and says his government has done much to stem corruption.
Those who have benefited from Angola's $50-billion-a-year in oil sales are unlikely to support any dissent.
"We've actually had more customers since the kwanza crashed. They can't get dollars so they buy luxuries," said Louis Mendes, 29, who runs a jewellery shop in "Bela's Shopping", an upmarket mall named for its owner, Isabel dos Santos.
"There is an incredible disparity between super rich and super poor. No middle ground," Mendes added, leaning on a glass counter containing Gucci, Versace and Louis Vuitton watches costing up to $10,000.
Though inequality is a major problem across much of Africa, Angola provides one of the starkest examples. The Gini Coefficient, a World Bank measure of inequality, puts Angola down at 169th out of 175 countries.
Despite its pothole strewn roads, leaking water pipes and dilapidated electricity network, Luanda is often ranked as the most expensive city in the world for wealthy residents and visitors accustomed to developed world comforts.
Most Angolans in Luanda live on less than $2 a day but foreign oil workers and the Angolan elite are likely to pay more for a hotel room, dinner out or a bottle of milk than they would in Paris, Singapore or New York.
A lopsided economy where agriculture and manufacturing have been squeezed out by oil, combined with chronic corruption and dilapidated infrastructure, all add to costs.
If you want running water and reliable electricity, a hotel room could cost $500-a-night, breakfast another $50 and a plate of sushi will set you back $100. Rent on a rundown one bedroom flat could top $3,000-a-month.
Many older Angolans will continue to put up with a failure by government to bridge the gap between rich and poor because life in poverty compares favourably to decades of war.
"Some came into this world to be rich and some to be poor," fisherman said Joaquim Sozinho, 46, taking a break from gutting fish on a seafront lined with luxury yachts.
"This is our fate." (Editing by Peter Graff)
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