Fitch Ratings downgraded its outlook on Angola from stable to negative but kept the credit rating on long-term debt issued in local and foreign currency at “B”, the agency said in a statement issued Friday.

The review of the outlook is the result, the agency said, of the fact that Angola is heavily dependent on oil which, along with low prices, has had a great impact on tax revenues and the country’s macroeconomic indicators and this has increased the risks faced by the Angolan economy.

The agency mentions, however, the strong and timely action of the government which helped to moderate the drop in foreign reserves, when oil accounts for 95 percent of exports and 50 percent of tax revenues.

Fitch Ratings projects that Angola’s budget deficit will increase to 4.6 percent of Gross Domestic Product (GDP) this year, after about 1.6 percent in 2015, and that revenues from oil will fall from 33 percent of GDP between 2004 and 2014 to 10 percent of GDP in 2016 and 2017.

The agency said the collapse in oil prices had been a heavy blow to Angola’s foreign reserves, despite a strong contraction of imports, and forecasts that the current account deficit will widen to 14 percent of GDP in 2016, after a deficit of 7.8 percent in 2015 and a large surplus in 2013. (macauhub/AO)