S&P Global Ratings affirms Angola's B- rating

Investing.com – S&P Global Ratings confirmed Angola’s long-term sovereign credit rating at B-, with a short-term rating of B, and a stable outlook on Friday.

The rating agency noted that Angola is vulnerable to market conditions, with weak fiscal health and high financing needs, but these factors are balanced by its foreign exchange buffers and expected oil revenues.

Unless there are significant shocks to oil prices or production, Angola’s debt repayment capacity remains intact, but fiscal slippage or increased debt service costs due to higher local currency financing needs could limit this capacity.

The 2025 fiscal budget is significantly more expansionary than recent years, raising concerns about fiscal slippage. Although the 2026 budget shows the Ministry of Finance attempting to control spending, it remains relatively loose compared to historical levels and may further slip before the 2027 elections.

S&P forecasts that the government’s total deficit will average 2.6% of GDP from 2026 to 2029, compared to an average surplus of 0.2% from 2018 to 2022. This reflects increased current expenditures, especially wages, which could reverse previous debt vulnerabilities.

Government debt is expected to remain stable at around 44% of GDP by the end of the year, then rise, significantly below the 94% level in 2020. After successfully repaying European bonds in November 2025, Angola’s next $1.75 billion European bond will mature in May 2028.

The country remains highly susceptible to external shocks and oil industry dynamics, leading to structural high inflation, with an average annual inflation rate of 23% since 2016. Due to aging oil fields and infrastructure, oil production declined by 9.3% in 2025 to 1.06 million barrels per day, below the 2008 peak of 2 million barrels.

S&P forecasts that production will stay around 1.1 million barrels per day through 2028, with oil prices averaging $60 per barrel in 2026 and $65 per barrel on average in 2027-2028.

Government protests erupted in July 2025 after fuel subsidies were cut, prompting a more gradual approach to subsidy reform. Political decision-making in Angola remains highly centralized.

Interest payments are expected to average 35% of government revenue from 2026 to 2029, though they will rise due to European bond maturities, with debt service still projected to be below 50% of government revenue in 2028.

Inflation averaged 20% in 2025, down from 28% in 2024, with December year-over-year data at 15.7%. The Central Bank expects inflation to continue declining, reaching 13.5% by the end of 2026, with a medium-term goal of single-digit inflation.

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