London, June 25, 2024 (Lusa) - Angola's credit rating as calculated by Fitch Ratings remaining unchanged shows that the evolution of the opinion on the quality of its sovereign debt will continue to depend on oil prices, Oxford Economics, a UK-baesd consultancy, said on Tuesday.
It is clear, write analysts in the African department of Oxford Economics, that Fitch's latest assessment of Angola's credit quality shows that the rating will continue to be at the mercy of the evolution of oil prices as long as it has high levels of debt in foreign currency and an overdependence on economic growth based on the oil sector.
In its analysis of Fitch holding the rating below investment grade at B- with a stable outlook, as published last week, Oxford Economics points out that the agency, before raising its rating, would need to see a deeper debt reduction, fiscal consolidation, accumulation of foreign currency reserves and improvements in dollar liquidity.
Last week, Fitch announced that it had decided to keep Angola's rating at B- and its Outlook at 'Stable', forecasting economic growth of 1.8% and 2.2% this year and next.
Its analysts wrote that the rating reflects weak governance indicators, high inflation, high levels of public debt in foreign currency and one of the highest levels of dependence on raw materials among the countries assessed by Fitch Ratings.
The ratings agency, which is owned by the same owners of the consultancy Fitch Solutions, explained that this data is offset by the higher international reserves compared to its peers, current account surpluses and manageable debt repayment risks due to a positive oil price environment over the next two years.
Its analysts pointed out that Angola's gross domestic product was expected to grow by 1.8% this year and 2.2% in 2025, essentially due to the buoyancy of the non-oil economy, after last year's economic growth of just 0.8%.
Even so, they pointed out, economic growth would be limited by high inflation, partly due to the reform of fuel subsidies, and continued limitations on the domestic supply of foreign currency.
In addition, consumer prices were expected to rise by an average of 28% this year and 18% in 2025, compared to an average of 15.2% last year.
MBA/ARO // ARO.
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