Rédaction Africa Links 24 with ANGONOTÍCIAS
Published on 2024-03-04 12:11:36
The consulting firm Oxford Economics considered today that the maintenance of Angola’s rating by the financial rating agency Standard & Poor’s highlights Angola’s ability to service debt in the next three years without external financing. “The comments by S&P experts on the government actively managing debt payments in the coming years show that they believe the country has sufficient resources to pay the high installments and maturities in the next three years, provided there are no adverse shocks,” a comment on Angola’s rating at level B-.
In a comment sent to clients, and accessed by Lusa, the African department of this British consultancy writes that “S&P says it would lower Angola’s rating if an external shock, such as a sharp drop in global oil prices or another exchange rate break, or internal problems were to limit the government’s ability to pay its foreign commercial debt service.”
They also point out that they could “improve credit rating if economic reforms support a broad-based economic recovery, along with a better-than-expected reduction in debt service costs and increased foreign currency reserves.”
According to analysts at Oxford Economics, “there are enough positive developments to suggest that oil production will see a slight recovery in 2024, in a context where robust non-oil sector growth is expected to continue,” which, they conclude, makes it likely that Angola will be able to service its debt without additional external financing. In the analysis accompanying the announcement of the rating retention on February 19, S&P says that “despite ongoing vulnerabilities, government debt will decline from almost 90% last year to 76% by the end of 2027, due to budget consolidation and inflation-driven GDP growth that exceeds debt accumulation.”
S&P notes that almost half (48%) of external debt payments this year and next will be made to China, through oil-backed payments, “and so a considerable portion of government oil revenues will continue to be allocated to payments to Chinese creditors, further weighing on budget flexibility.”
Total commercial debt payments will reach $4.4 billion this year, of which $800 million relates to Eurobond commercial debt securities issued in foreign currency, but will increase to $5.1 billion in 2025, of which $1.66 billion, about $1.54 billion, relate to Eurobonds.
Bilateral and multilateral debt payments “are more modest, reaching $1.3 and $1.6 billion, respectively, over the same period,” they conclude.
Read the original article (Portuguese) on Angonoticias
