Africa-Press – Angola.
The consultancy Oxford Economics Africa considered, Tuesday (25), that Angola could benefit from further improvements in the assessment of sovereign credit by rating agencies.
“Provided that oil prices remain stable and the Government continues with prudent budgetary spending, we anticipate that Angola could see further rating increases in the next 12 to 18 months given the forecasts of an increase in oil production and increased growth. economy in this period”, it reads.
In the analysts’ comment, taken up by Lusa, the consultant shows concerns about the country’s need to control spending in an election year. The analysis, sent to investors, comes just days after Fitch Ratings raised its assessment of Angola’s credit quality by two notches, from CCC to B-.
The note states that oil revenues have risen significantly since the beginning of 2021, “dramatically improving Angola’s budgetary position”, recall the analysts, stressing that despite the fall in production, the rise in prices led to revenue rising by more than 60 percent last year, which moves the budget balance from a deficit of 1.7 percent in 2020 to a surplus of 2.9 percent last year.
“In addition to the recovery in oil revenues, the three largest rating agencies were also impressed by the strong fiscal consolidation efforts and currency liberalization under the program with the IMF, which ended last year”, conclude the analysts.
The financial rating agency Fitch Ratings last Friday improved Angola’s rating to B-, with a perspective of stable evolution, anticipating an economic expansion of 2.1 percent for this year, after growing 0.1 percent. in 2021.
According to these analysts’ calculations, the ratio of public debt to Gross Domestic Product (GDP) should have fallen to 78.5 percent by the end of 2021, which, they admit, represents “a significant improvement compared to forecast of 126.9 percent made in September 2020 and well below the 123.8 percent of GDP in 2020”.
The debt-to-GDP ratio, one of the indicators most followed by international investors to gauge the country’s ability to honor financial commitments, is expected to decline even further, to 74.8 percent of GDP in 2022 and 73 percent of GDP in 2022. next year, “as a result of the nominal increase in GDP (which rose 32.4 percent in 2021, partially reflecting oil prices), a stabilization of the Kwanza, with the previous depreciation being an important reason for the increase in debt in the The rating of B-, which represents an increase of two levels compared to the CCC previously
Assigned by Fitch Ratings, means that analysts consider that despite the credit being highly speculative, the country has the capacity to meet its financial commitments.
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