The consultancy Oxford Economics considered, yesterday, Monday, that the maintenance of Angola’s rating by the financial rating agency Standard & Poor’s underlines Angola’s ability to service the debt over the next three years without external financing.
“Comments from S&P experts regarding the fact that the government is actively managing debt payments over the next few years shows that they think the country has sufficient resources to pay the high installments and maturities over the next three years, as long as there are no shocks adverse”, reads a comment on the maintenance of Angola’s rating at level B-.
According to Agência Lusa, in the comment sent to clients, the African department of this British consultancy writes that “S&P says it would lower Angola’s rating if an external shock, such as a sharp drop in the global oil price or another drop in the rate exchange rate, or internal problems limited the government’s ability to service its external commercial debt”. It also points out that it could “improve the credit rating if economic reforms support a broad-based economic recovery, along with a better-than-expected reduction in debt service costs and greater foreign currency reserves”.
For analysts at Oxford Economics, “there are enough positive developments to suggest that oil production will achieve a slight recovery in 2024, in a context in which the robust growth of the non-oil sector must be maintained”, which, they conclude, makes it likely that Angola can service its debt without having to resort to additional external financing.
In the analysis accompanying the announcement of the maintenance of the rating, on February 19, S&P says that “although vulnerabilities remain pressing, government debt will fall from almost 90% last year to 76% at the end of 2027, due to budgetary consolidation and the fact that the increase in inflation results in GDP growth that exceeds debt accumulation”.
S&P notes that almost half (48%) of external debt payments this year and next will be made to China, through payments with oil as collateral, “and therefore a considerable part of the government’s oil revenues will continue to be allocated to payments to Chinese creditors, which weighs even more on budgetary flexibility”.
Total commercial debt payments will reach USD 4.4 billion this year (4 billion euros), of which USD 800 million (742 million euros) relate to commercial debt securities issued in foreign currency (Eurobonds) , but will increase to USD 5.1 billion (4.7 billion euros) in 2025, of which USD 1.66 billion, around 1.54 billion euros, relate to Eurobonds. Bilateral and multilateral debt payments “are more modest, reaching USD 1.3 and USD 1.6 billion (1.2 and 1.4 billion euros), respectively, in the same period”, they conclude.