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Fitch Maintains Angola’s Rating and Forecasts Growth of 1.8% This Year

Fitch Maintains Angola’s Rating and Forecasts Growth of 1.8% This Year

Financial rating agency Fitch has decided to keep Angola’s rating at “B-” and its outlook at “Stable”, forecasting growth of 1.8 per cent and 2.2 per cent this year and next.

“Angola’s rating reflects weak governance indicators, high inflation, high levels of public debt in foreign currency and one of the highest levels of dependence on raw materials among the countries assessed by Fitch Ratings,” the analysts wrote in the note that maintained the rating at “B-“, below the investment recommendation.

In the analysis, the experts from the agency owned by the same owners of the consultancy Fitch Solutions explain that “these data are offset by the higher international reserves compared to its peers, current account surpluses and manageable debt repayment risks due to a positive oil price environment over the next two years”.

Fitch analysts point out, in information released on Friday (14), that Angola’s Gross Domestic Product is expected to grow 1.8 per cent this year and 2.2 per cent in 2025, essentially due to the non-oil economy, after last year’s economic growth of just 0.8 per cent.

Even so, they point out, “economic growth will be limited by high inflation, partly due to the reform of fuel subsidies, and continued limitations on the domestic supply of foreign currency,” says Fitch Ratings, adding that prices are expected to rise by an average of 28 per cent this year and 18 per cent in 2025, compared to an average of 15.2 per cent last year.

With regard to public debt, Fitch highlights the high amortisation amounts that the country will have to pay this year and next, which will rise to 6.5 billion dollars this year and 6 billion dollars in 2025, compared to the 5.6 billion dollars paid last year.

“These higher repayments reflect the end of the moratorium on Chinese creditors in June 2023 and will be met through a combination of the use of oil revenues, disbursements from bilateral and multilateral sources, financing lines from commercial banks and liquidity in the guarantee account related to China’s loans that use oil as collateral,” the agency said in the note sent to Lusa.

The debt payments, the analysts also point out, will also be “supported by the recently announced agreement with Chinese creditors, according to which Angola will be able to use part of the liquidity in the guarantee accounts, between 150 and 200 million dollars a month, to service the debt to other creditors”.

Source: Lusa


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