The Standard & Poor’s rating agency (S&P) downgraded its credit rating of Angola’s debt in foreign currency from “BB-” to “B+” while maintaining a stable outlook, the agency said in a statement.
The cut in Angola’s credit rating was due to the impact felt in the economy from the drop in the price of oil and consequent reduction in tax revenue.
S&P expects Angola’s deficit to experience significant deterioration, reaching 5 percent on average, between now and 2017, compared to the forecast announced in August 2014 of a surplus of 1 percent for Angola’s public accounts.
“When we looked at Angola in August 2014, we predicted the price of Brent crude oil would stand at US$105 in 2015 and US$100 from 2015 to 2018. We now expect that the price per barrel will be US$55 in 2015 and US$70 between 2015 and 2018, so we have revised forecasts for Angola’s main macroeconomic aggregates,” S&P’s statement said.
As a result of the decline in oil prices, Standard & Poor’s now expects that as a result of budget deficits in 2015 and beyond and “before starting a reversal of this process,” Angola’s public debt to increase to 30 percent of Gross Domestic Product this year, after a total of 23 percent in 2014.
The “Stable” outlook according to S&P’s analysts is a reflection of a set of financial instruments available to the government and the monetary authorities to control the impact of a prolonged drop in oil prices and therefore tax revenue. (macauhub/AO)