Africa-Press – Angola. The financial rating agency Standard & Poor’s last week improved Angola’s rating to B-, predicting that the economy had already emerged from recession last year, growing by 0.2 percent and accelerating to 2.3 percent this year.
“The Executive’s reform program, higher oil prices and the debt relief of some official creditors are reducing the immediate liquidity risks, which is why the economic recovery and a depreciation of the currency are expected to be lower than between 2018 and 2020 sustain a continued decline in the level of debt, a fact that helped that agency to raise Angola’s “rating” from CCC+ to B-“, reads the Standard & Poor’s note sent to Lusa.
In the note, S&P explains that it attributes a perspective of stable evolution to the assessment of credit quality, balancing “the still large external financing needs and the associated risks, with the gradual fall in government debt levels until 2025”.
The rise in Angola’s rating comes a week after Fitch Ratings also raised its opinion on the quality of Angolan credit, and on the same day that Fitch Ratings raised its rating on Banco Angolano de Investimento (BAI), arising from the improvement of credit on the country where the bank operates, since a bank cannot have a better “rating” than that of the country where it is installed.
“Risks on Angola’s debt repayment have decreased due to the above-expected improvement in debt metrics, the track record and expectations regarding fiscal prudence, and a more supportive external environment,” write S&P analysts, who consider that the slowdown of the covid-19 pandemic will highlight the efforts of recent years.
“As the Covid-19 pandemic subsides, the country is seeing the gains from difficult reforms implemented in recent years and under the program with the International Monetary Fund between 2018 and 2021, including exchange rate liberalization, introduction of VAT and rationalization of expenditure”, reads the note sent to Lusa.
S&P expects public debt to have “fallen sharply to 75% of GDP in 2021, down more than 55 percentage points from 2020, a dramatic drop that was helped by the currency’s 18% appreciation at the end of last year compared to the previous year.” year, in addition to a substantial rise in nominal GDP.” This evolution, conclude the analysts, “reverts a good part of the 67 percentage point rise recorded in the level of debt between 2017 and 2020, which was motivated, in large part, by the depreciation of almost 75 percent of the currency.
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