The credit rating agency Fitch has maintained Angola’s rating at B-, reflecting concerns over weak governance indicators, high inflation, elevated levels of foreign currency public debt, and one of the highest dependencies on raw materials among the countries analyzed. However, these challenges are somewhat mitigated by Angola’s substantial reserves and current account surpluses, which provide a buffer amid a challenging international oil price environment and limited financing sources.
Fitch’s decision to keep the rating at this level comes with a forecast of economic growth slowing to 2.8% this year compared to 4.4% last year, with expectations that Angola will not exceed a 3% growth rate in the following year. The country is also set to face lower oil prices in the coming semesters, with an estimated average of $65 per barrel, down from last year’s average of $79.5. Additionally, a slight decrease in oil production from 1.1 million barrels per day in 2024 to 1.07 million this year is anticipated, significantly impacting the budget due to the heavy reliance on oil exports for foreign currency.
Regarding public debt, there was a significant reduction last year to 54.6% of GDP, compared to a ratio of 70.7% by the end of 2023. This reduction was mainly driven by primary budget surpluses, strong nominal GDP growth, and external debt repayments totaling $1.9 billion, approximately €1.7 billion. An internal audit by Angolan authorities contributing to this reduction identified data duplication, representing a $1.8 billion decrease or about 2% of GDP.
Fitch projects a budget deficit of 2.4% of GDP for this year and 2.3% for the next year, primarily due to falling oil revenues. It also estimates that fuel subsidy expenditures will decrease to 1.8% in 2025 and 1.4% in 2026, indicating an administrative fuel price increase borne by users.
With economic growth predictions of 2.8% for this year and 3% for the next, Fitch highlights that this is below the previous year’s growth of 4.4%, driven by oil production recovery and strong performance in the services and diamond sectors. Despite the deceleration, inflation is expected to remain high, with a projected average of 20% in 2025 and 16% in 2026, down from 28% in 2024. Nevertheless, this rate is significantly above the average inflation rate of around 4% for B-rated countries.
