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Investing.com -- Fitch Ratings has maintained Angola’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ’B-’ and affirmed a stable outlook. The rating reflects a balance between weak governance indicators, high inflation, high foreign-currency-denominated government debt, and extreme commodity dependence, offset by higher international reserves and current account surpluses.
Angola’s IDRs are expected to run current account surpluses of 1.3% of GDP in 2025 and 2026, a decrease from 5.5% in 2024. This reduction is primarily due to lower crude oil exports, with average annual Brent prices expected to be $65 per barrel in 2025 and 2026, down from $79.5 per barrel in 2024. A slight decline in domestic oil production to 1.07 million barrels per day is also projected, down from 1.1 million barrels per day in 2024.
Angola’s international reserves are expected to provide a significant external financing buffer, despite declining from $15.8 billion at the end of 2024 to $14.5 billion in 2025 and $14.0 billion in 2026. This decline reflects high external debt servicing by the government, but the country’s external liquidity ratio will stay near 110%, slightly below the ’B’ median of 130%. The international reserves will cover around six months of current external payments, above the ’B’ median of around 4.5 months.
Government debt as a percentage of GDP sharply fell to 54.6% at the end of 2024 from 70.7% in 2023, largely due to primary surpluses, strong nominal GDP growth, and net external debt repayments of $1.9 billion. Fitch predicts Angola’s debt/GDP will drop to 48.1% at the end of 2026, reflecting primary budget surpluses and continued strong nominal GDP growth, despite further exchange-rate depreciation.
Fitch expects Angola’s fiscal deficits to be 2.4% of GDP in 2025 and 2.3% in 2026, mainly due to a decrease in government revenue driven by lower oil prices. Expenditure pressures associated with the commemoration of Angola’s 50 years of independence in 2025 and general elections in 2027 will prevent a stronger fiscal adjustment.
Fitch anticipates Angola’s external amortizations to remain high at $6.5 billion in 2025, up from $6.0 billion in 2024, and to drop to $5.2 billion in 2026. Despite some reliance on short-term external financing, gross financing needs are expected to be met through disbursements from the World Bank, the African Development Bank, and financing lines from export-credit agencies, as well as issuance in the domestic market.
Real GDP growth is expected to slow to 2.8% in 2025 and 3.0% in 2026, down from 4.4% in 2024 due to lower oil production and revenue and tight monetary policy. Inflation is forecasted to average 20% in 2025 and 16% in 2026, down from 28% in 2024, but still well above the ’B’ median of around 4%.
The rating could be downgraded if there are heightened external liquidity pressures due to a further decline in oil prices or reduced access to external financing, leading to a marked decline in international reserves, or a significant increase in government debt/GDP due to a widening of the fiscal deficit. Conversely, the rating could be upgraded if there is a marked reduction in external refinancing risks and an improvement in public and external debt sustainability.
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