Fitch Ratings kept Angola’s long-term foreign currency risk rating unchanged at “B”, which is below investment grade, but revised the outlook for economic growth from “Negative” to “Stable” due to higher oil prices and the adoption of a set of reforms, the agency said in a statement released on Wednesday.
Fitch Ratings said in its assessment that the adoption of an ambitious agenda of reforms, fiscal and structural adjustments and the introduction of a new exchange rate regime at the beginning of the year “will help reduce external vulnerability and improve public finances.”
The agency added that the prospects for economic recovery have improved significantly with the rise in oil prices, to which it is necessary to add “the monetary and fiscal adjustments” introduced and planned by the government of current President João Lourenço.
The introduction of the new floating exchange rate system with bands, replacing the previous regime of administrative exchange rates, has already led to Angola’s currency, the kwanza, losing 31.5% of its value against the euro and 25.2% against the US dollar.
The new regime was described as the “most important development” introduced by the new government by Fitch Ratings, which states that the maintenance of the junk risk rating reflects the country’s high dependence on oil exports, high public debt and the level of diminishing reserves abroad. (macauhub)