Standard & Poor’s (S&P) has kept its credit rating for Angola’s sovereign debt at “B-/B” but lowered the country’s outlook from stable to negative, according to an analysis issued on Monday.
“The negative outlook reflects the possibility of a drop, if the high çevel of public debt makes financing needs unsustainable or if budgetary or external pressures lead to twin deficits [external and budgetary] that are bigger than expected,” said the statement.
In its explanation of the risk rating, kept unchanged at “B-/B”, which is below investment grade, the S&P analysts noted that “the weight of debt has risen rapidly,” and point out that “debt rose from 88.6% of Gross Domestic Product (GDP) in 2018 to 103% of GDP in 2019, while in 2014 it stood at 30%,”
This significant increase between 2018 and 2019, was mainly the result of a drop of over 56% in the value of the kwanza against the main world currencies, the analysts said, adding that they expect debt to fall in the next few years.
On a macroeconomic level S&P expects Angola to return to growth this year, with GDP expansion of 1.0%, after recording a contraction of 1.1% last year.
For 2021 the ratings agency expects growth of 1.5% and of 2.5% the following year and 2.8% in 2023. These figures are significantly lower than the growth rate of 4.8% recorded in 2014 when the decline in oil prices initially slowed the Angolan economy then sent it into recession. (macauhub)