Fitch Affirms Angola at ‘B-‘ with Stable Outlook
Fitch Ratings has affirmed Angola’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B-‘ with a stable outlook. Ratings analysts stated that Angola’s ratings reflect weak governance indicators, high inflation relative to peers, high levels of foreign-currency-denominated government debt and one of the highest commodity dependences among Fitch-rated sovereigns.
These constraints are balanced by current account surpluses and international reserves above peer medians, which provide some buffer against lower oil prices and still-low concessional financing, it added.
Fitch analysts expect Angola’s current account surplus to narrow to 1.4% of GDP in 2025, 0.6% in 2026 and 0.7% in 2027, from 5.5% in 2024, reflecting lower oil revenues.
The ratings agency assumes Brent averages USD70/b in 2025 and USD65/b in 2026 and 2027 and oil output averaging 1.02 million barrels per day (mpd) in 2025 down from 1.13 mbpd in 2024, reflecting unplanned maintenance stoppages, before recovering partially to 1.05 mbpd in 2026 and 2027.
Increasing mining (mainly copper) and natural gas exports will partly offset the deterioration in oil receipts, ratings analysts stated.
International reserves are high relative to peers but analysts expect them to decrease slightly with the narrowing of the current account surplus and high external amortisations in 2025-2026.
This will be partially offset by stronger foreign direct investment inflows in the oil sector following the introduction of investment incentives in November 2024.
“We project reserves will decline from USD 15.8 billion at end-2024 (about 6.1 months of current external payments) to USD15.6 billion by end-2025 (5.9 months), USD 15.2 billion by end-2026 (5.8 months) and USD 14.8 billion by end-2027 (5.7 months), remaining above the projected ‘B’ median in 2025 (4.3 months)”.
Fitch expects fiscal performance to weaken in 2025-2026 due to an oil-driven decline in revenue and an election-related pause in fiscal consolidation.
Ratings analysts expect the primary surplus to narrow to 1.1% of GDP from 3.9% in 2024 and the overall deficit will widen to 3.1% of GDP in 2025 from 1.0%, against the government’s initial target of 1.7%.
“In 2026, we expect the overall deficit to remain at 3.1% of GDP, despite planned expenditure reductions, reflecting our expectation of limited appetite for deeper cuts ahead of the 2027 presidential election”.
Angola fuel subsidy reform advanced in 2025, with diesel subsidies reduced in April and July through a doubling of the administrated price since the start of the year.
The second cut triggered the most significant social unrest in years and, together with the approaching and potentially close 2027 elections, prompted the authorities to suspend further cuts until 2027.
Analysts expect fuel subsidy spending to decline from 2.9% of GDP in 2024 to 1.6% in 2025, reflecting moderating oil prices and the partial year impact of the 2025 subsidy cuts, and to 1.1% in 2026 given the full-year effect.
Debt decline continues but a slow pace, according to the rating note. Ratings analyst expect government debt/GDP to decrease gradually, to close to 50% in 2025 and 48% in 2026, from 54.3% at end 2024, due to moderate primary surpluses and nominal growth.
Fitch stated that risks to this trajectory come from lower oil revenues and the exchange rate, given the large share of foreign-currency debt. “Our forecast implies that Angola’s debt will be in line with the ‘B’ median of 51% we expect for the same period”.
The country’s external amortisations are set to peak at about USD7.5 billion in 2025 from USD6.5 billion in 2024, with more than half falling in 4Q25.
Fitch said amortisations are projected to decline close to USD6 billion in 2026 and 2027. The country’s interest costs is expected to remain high due to high internal and external funding costs and limited access to concessional financing for budget support.
External market issuance resumed with two Eurobonds in October raising USD 1.75 billion (five-year and 10-year), the first issuance since 2022.
Pricing remains high, with coupons near 10% and maturities shorter than prior issuances. Angola will also use domestic issuance (including US dollar-denominated), multilateral and export credit agencies (ECA) disbursements to meet funding needs.
“We expect the Treasury to reduce reliance on costly short-term commercial loans or central bank medium term financing as recent market access reduces funding stress”. Fitch said regular Eurobond issuance might be required over the next few years given the amortisation profile.
Ratings analysts forecast real GDP growth to fall to 2.0% in 2025 (4.4% in 2024) due to declining oil production, partly offset by higher diamond output and solid performances in commerce, agriculture and construction.
“We expect real growth to rise to 2.5% in 2026, with the oil sector contribution remaining weak due to a limited rebound in production, while the non-oil economy continues to expand based on mining and broader diversification, notably import substitution in agriculture”.
Inflation has fallen markedly from mid-2024 peaks, helped by high policy rates, FX stability and softer fuel and food prices. The central bank cut the policy rate by 50bp to 19% in September, signalling cautious easing while remaining restrictive.
Ratings analysts forecast inflation below 18% by end-2025 and near 10% by end-2026. Angola’s FX stability in the context of FX backlogs, partly supported by greater US dollar sales on the domestic market, supports disinflation but constrains flexibility and increases misalignment risk.Dangote, BUA Drag Total Value of Cement Stocks Down by N1.47trn
