Moody's Investors Service has today affirmed the B1 long-term issuer and senior unsecured ratings of the Government of Angola and maintained the negative outlook. The short-term issuer ratings remain unchanged at Not Prime.
The key drivers supporting the affirmation of the B1 rating are:
1) The improvement in the macroeconomic situation, supported by the rebound in oil prices and slightly rising oil production.
2) The significant fiscal adjustment achieved by the authorities, with contained fiscal deficits, which helped to keep the government debt-to-GDP ratio on par with B1-rated sovereigns.
3) Progressively receding external vulnerabilities and financial buffers that have by and large been preserved.
The negative outlook recognizes that downside risks remain. In particular:
1) The government remains susceptible to debt roll-over risks and further currency devaluation as gross borrowing requirements remain elevated this year and next.
2) Government spending pressures persist due to the electoral cycle and high inflation.
3) Angola faces a difficult balancing act between preserving foreign exchange reserves and providing sufficient dollars into the economy to keep banks and businesses running smoothly.
All country ceilings remain unchanged. The long-term local-currency bond and deposit ceilings remain at Ba1 while the long-term foreign-currency bond and deposit ceilings remain unchanged at Ba3 and B2, respectively. Angola's short-term foreign-currency bond ceiling also remains unchanged at Not Prime.
