Fausio Mussá considered that there was a substantial improvement in the country's fiscal management, speaking during the presentation of the 1st Standard Bank Economic Briefing, noting that the deficit reduction and surplus of around 3 percent of Gross Domestic Product (GDP) helped to reduce the debt.
"Angola recently recorded a debt of 123 percent of GDP and, at the moment, our estimate is that the total Angolan debt is below 80 percent of GDP, it is possible to reach that level", considering the substantial improvement in GDP in terms of of around 60 billion dollars to 100 billion dollars and the impact of debt relief that Angola has benefited from multilateral institutions and China, he said.
He considered that Angola has been successful in introducing taxes and expanding the tax base, bringing more taxpayers into the system and thus offsetting the reduction in oil revenues, however, there is still "great pressure from the debt service that requires fiscal management prudent".
"We note that the total amount of loan repayment is very close to the total amount of the new debt that Angola intends to contract, which means that in net terms there will not be an increase in debt", he commented, regarding the annual indebtedness plan of the government.
"In the debt plan, the government announces an issue [of Eurobonds] around 2.8 billion dollars, looking at what has been the favorable performance of the Angolan economy, I do not anticipate that there will be difficulties in raising this level of debt at this time", stressed the person in charge of Standard Bank.
As for interest rates, he considered that the National Bank of Angola should not have room for major changes this year due to inflationary pressure, mainly associated with supply, either because of the effects of the drought that has affected food production, or because of the great global pressure on imported inflation.
"Throughout 2022, interest rates in real terms are expected to remain negative, which means that the nominal interest rate is lower than the inflation rate. Angola is in a difficult situation to make this correction, which should happen by reducing inflation", stressed Fausio Mussá.
The economist admitted that the level of interest rates "may reduce investment", but stressed that sustainability is extremely important, as is confidence.
"I believe that the BNA will be prudent and as long as inflation does not fall to lower levels, it will probably not make any interest rate cuts", he continued.
Standard Bank maintains inflation expectations at around 18.1 percent for the end of this year, "very much in line with what the government expects to happen."
