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Investing.com -- S&P Global Ratings has affirmed Angola’s ’B-’ long-term and ’B’ short-term sovereign credit ratings with a stable outlook on Friday.
The rating agency balanced Angola’s weakening fiscal position and large funding needs against its foreign currency buffers and expected oil revenue support through 2028.
Angola’s fiscal policy is shifting toward higher deficits, with general government deficits forecast to average 3.6% of GDP annually from 2025-2028, compared to surpluses averaging 0.2% from 2018-2022. This reflects increased recurrent spending, especially wages, potentially reversing previous debt vulnerability reductions.
The government postponed planned Eurobond issuance this year due to market instability, instead raising about $2.4 billion through domestic debt. Angola has also undertaken liability management exercises with local banks totaling $1.9 billion (about 1.5% of GDP) in 2025.
S&P expects Angola to meet its upcoming Eurobond repayment in November 2025, supported by assets totaling $21.4 billion (about 19% of GDP). This includes $15.1 billion in foreign currency reserves, $1.9 billion in its sovereign wealth fund, and other financial resources.
Oil production faces challenges, with an 8.5% contraction in the first half of 2025 due to aging fields. Production is forecast to remain at about 1.1 million barrels per day through 2028, with oil prices averaging $65 per barrel over 2025-2028.
Despite lower debt levels than in recent years, Angola’s interest costs remain substantial. General government debt, net of liquid assets, fell to 54.6% of GDP in 2024 from 108% in 2020 but is expected to rise gradually through 2028 due to higher financing needs.
Inflation is projected to average 20% in 2025 and remain above 10% over the next five years, reflecting weak monetary policy effectiveness. The banking sector faces risks from high exposure to government debt, with banks’ exposure to the central government amounting to about 30% of their total assets.
The stable outlook reflects S&P’s expectation that Angola has sufficient resources to meet near-term debt obligations, barring significant shocks to oil price or production.
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