The financial rating agency Standard & Poor’s (S&P) has decided to keep Angola’s rating at B-, with a stable outlook due to the large financing needs, balanced with a favourable environment in the oil industry.
“Our rating of Angola is conditioned by the low GDP [Gross Domestic Product] per capita, high dependence on oil and a weak institutional framework, although gradually improving; these factors keep Angola highly susceptible to external shocks and the global dynamics of the oil sector and result in structurally high inflation and relatively weak public finances,” the analysts write in the note that reports the decision to maintain the opinion on the quality of sovereign credit at B-, below the investment recommendation.
In the text, S&P says that “short-term liquidity pressures have largely eased after the Angolan government reduced outstanding external debt by $4 billion [ €3.8 billion] in 2024, but fiscal slippage, susceptibility to external shocks, particularly an oil price shock, and the high dollarisation of the economy, represent a persistent risk.
Although debt servicing is reducing, it continues to be a problem for the Angolan economy due to the “high and expensive debt servicing”, compounded by fuel subsidies’ costs and the “rapid increase in wage costs”.
S&P predicts that the economy will grow by an average of 2.7% by 2028, “supported by reasonably stable oil production volumes, together with improved activity in the non-oil sector”, and also predicts that the budget deficit, which the government predicted would be 0.02% last year, but which ended up at 1.2%, will grow to 1.5% due to wage increases and spending on fuel.
“We anticipate a slower pace of reduction in the burden of fuel subsidies, which represents a significant softening of fiscal policy compared to the very rigid approach of recent years, which could result in the accumulation of more debt and increase the cost of servicing the debt from 2026 to 2028,” warn the analysts, pointing out that the cost of interest on the debt is worth 25.8% of state revenue this year, down from 30.4% last year.
As for economic growth, S&P estimates that Angola will grow by 2.5% this year, almost half the 4.7% recorded in 2024, and then stabilise at 2.8% until 2028.
Lusa
