The credit rating agency Fitch Ratings has decided to maintain Angola’s rating at B- with a stable outlook, highlighting the risk of “spending slippage” due to next year’s elections, Lusa reported on Monday, May 11.
“The stable outlook reflects our view that the risks to the rating are broadly balanced; higher oil prices could generate windfall revenues, supporting fiscal consolidation and foreign reserves, but this upside potential is offset by the risk of spending slippage, particularly in the run-up to the 2027 elections,” Fitch said in a statement.
In the note, analysts also warn that “the expected recovery in oil production remains uncertain and could potentially offset some of the gains.”
Fitch Ratings decided to maintain its assessment of the country’s ability to meet its financial obligations, keeping the rating at B-, below investment grade, or “junk,” as it is commonly referred to, due to “weak governance indicators, high inflation, high levels of foreign-currency public debt, and one of the highest dependencies on raw materials among the countries assessed.”
On the other hand, he adds, “these limitations are offset by current account surpluses and international reserves that exceed the average for comparable countries, as well as by a declining public debt ratio.”
With the July 2025 protests against fuel prices “highlighting the potential for social unrest, we see an increased risk of pre-election spending sprees on social transfers and capital expenditures, but we expect broad policy continuity regardless of the election outcome,” the analysts say.
Fitch forecasts that international reserves will increase in 2026, providing an adequate external reserve, despite large external debt repayments of 3% to 4% of Gross Domestic Product (GDP) expected through 2027 and an even higher peak in 2028.
The current account surplus is expected to “increase significantly in 2026, compared to the 0.4% recorded in 2025, due to higher oil prices and production as new oil fields come online.”
On the fiscal front, Fitch estimates that last year’s public deficit stood at 4.5% of GDP, with a small primary deficit of 0.4%, and forecasts that the primary budget balance (excluding debt interest payments) will be positive this year, due to an increase in oil revenues.
Public debt, which stood at 51% of GDP at the end of 2025, is expected to fall to less than 46% this year, thanks to primary surpluses and strong nominal GDP growth, analysts say, adding that external debt accounts for 72% of the total, which exposes the country to exchange rate risks.
Finally, inflation this year is expected to improve from 12.4% in March to 10% in December, “supported by the stability of the kwanza, by a restrictive monetary policy maintained through a cautious and gradual pace of further interest rate cuts, and by fuel subsidies, which protect consumers from the impact of oil prices on retail prices.”
