Angola’s credit rating affirmed with stable outlook at Fitch

Investing.com -- Fitch Ratings has affirmed Angola’s Long-Term Foreign-Currency Issuer Default Rating at ’B-’ with a Stable Outlook, according to a statement released Friday.

The rating reflects Angola’s weak governance indicators, high inflation compared to peers, high levels of foreign-currency-denominated government debt, and significant commodity dependence, balanced by current account surpluses and above-median international reserves.

Angola’s current account surplus is expected to narrow to 1.4% of GDP in 2025, 0.6% in 2026, and 0.7% in 2027, down from 5.5% in 2024, primarily due to lower oil revenues. Fitch assumes Brent crude will average $70 per barrel in 2025 and $65 per barrel in 2026 and 2027.

Oil production is projected to decline to 1.02 million barrels per day in 2025 from 1.13 million in 2024 due to maintenance stoppages, before partially recovering to 1.05 million barrels per day in 2026 and 2027. Increasing mining and natural gas exports will partially offset the decline in oil receipts.

International reserves are expected to decrease slightly from $15.8 billion at end-2024 (6.1 months of current external payments) to $15.6 billion by end-2025 (5.9 months), remaining above the projected ’B’ median of 4.3 months in 2025.

Fiscal performance is forecast to weaken with the primary surplus narrowing to 1.1% of GDP from 3.9% in 2024, and the overall deficit widening to 3.1% of GDP in 2025 from 1.0%. Fuel subsidy reform advanced in 2025, with diesel subsidies reduced in April and July, but further cuts were suspended until 2027 following significant social unrest.

Government debt is expected to decrease gradually to around 50% of GDP in 2025 and 48% in 2026, from 54.3% at end-2024, though risks remain from lower oil revenues and exchange rate fluctuations given the large share (79%) of foreign-currency debt.

Angola resumed external market issuance in October with two Eurobonds raising $1.75 billion, its first issuance since 2022, though pricing remains high with coupons near 10% and shorter maturities than previous issuances.

Real GDP growth is forecast to fall to 2.0% in 2025 from 4.4% in 2024 due to declining oil production, before rising to 2.5% in 2026. Inflation is expected to drop below 18% by end-2025 and near 10% by end-2026, supported by high policy rates and foreign exchange stability.

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