Moody’s revises economic growth forecast for Angola downwards

28 August 2015

The Moody’s credit rating agency has downwardly revised the growth forecast for the Angolan economy to 4.1 percent in 2015 and 4.7 percent in 2016, anticipating a budget deficit of 3 percent of GDP this year, the agency announced in a statement released on Thursday.

The statement specifies that it is not an evaluation of Angola’s credit rating but rather a market analysis. Moody’s indicates that it is concerned about the eventual weight of public debt on the country’s public finances, especially if loans and debt issues continue to compensate lower oil prices.

“The response to the oil price shock has been aggressive, but its debt burden is at risk of a substantial increase over the next two years should the government face difficulty maintaining fiscal discipline,” said Moody’s analyst Rita Babihuga, who follows the Angolan economy.

Angola’s public debt is forecast to rise to 42 percent of GDP this year, versus an estimated 32 percent in 2014, she added.

One positive note in the report concerns the financial buffers Angola has accumulated, notably US$5 billion in the sovereign wealth fund, which “could be used to soften the impacts of shocks to the economy.” (Macauhub/AO)