"The collapse of commodity prices hit Angola hard, especially in a context where the crucial oil sector was already in difficulty even before the pandemic spread," Virág Fórizs told Lusa.
"By the middle of this month alone the kwanza has fallen 7 percent against the dollar, and will probably continue to fall for the rest of the year," the analyst added, noting that "with debt securities in dollars already at unsustainable values, a 'default' seems increasingly likely.
Asked about the criteria for considering that the cost of interest is unsustainable, Fórizs said that "the historical reference that normally precedes the 'defaults' is the 1000 base points (10 percent)" and warned that "Angola has already exceeded this value some time ago.
For this year, Capital Economics estimates that the economy will continue to contract, predicting a retraction of 3.5 percent.
Asked how Angola could improve the economic situation, the Capital Economics analyst explained that one of the solutions is to increase involvement with multilateral financing institutions and the volume of the International Monetary Fund's (IMF) financial assistance programme, which he hopes will happen not only in Angola, but also in other countries.
"The IMF supported the African finance ministers' request for the suspension of all debt payments, which would release around US$44 billion this year, but even if this initiative moves forward, it won't be enough to prevent African economies from continuing their difficulties this year," the analyst told Lusa.
The social isolation measures, he added, are more difficult to implement on the continent, where the informal economy and the concentration of the population make containment at home more serious, because there are many jobs that are paid by the day and others that escape the rules of the Western model of labour relations.
"A quarter of workers in South Africa are either in the informal sector or are domestically employed, and they can lose all income if they stay at home," the analyst concluded, "although the figures are not exhaustive, it is certain that most Africans do not have enough savings to survive a period of forced unemployment, which makes it more difficult to apply the rules of home isolation.
In a report last week, Capital Economics already wrote that "in terms of which countries the default is most likely, Angola and Zambia, as well as Ecuador, stand out," arguing that "an important point is that in Angola and Ecuador the financial default would be more orderly due to the agreement with the IMF, which would give them technical assistance and guarantees to investors regarding the new payment plan.