"Among most African countries, Angola is probably the country that has made the most structural reforms in the last five years," Aurelien Mali said in an interview to Lusa by video conference from Dubai, pointing to budget consolidation, the new budget law. , the introduction of VAT and the adjustment of public finances as examples.
Asked if these reforms will not lead to a rise in the country's rating, which was lowered twice last year, the analyst replied that "we need to see what reality will be like" and underlined that, "for now, the risks reflected in the 'rating' they are balanced and three months of positive environment is little to change "the assessment of the quality of Angola's sovereign credit.
In the interview with Lusa, Aurelien Mali agreed that Angola should not need to seek debt relief beyond the Debt Service Suspension Initiative (DSSI) and pointed out that the economy is in a very different situation from the position of Zambia, Ethiopia and Chad, who requested adherence to the Common Framework for the Treatment of Debt in addition to the DSSI.
"The situation in Angola is very different from the situation in these countries; [the downgrade of the rating in 2020] was not a question of solvency, it was mainly a problem of pressure on external liquidity and the authorities negotiated a debt restructuring in the amount of 7 thousand million dollars with a creditor in China in the next two and a half years from June 2020 ", recalled the analyst.
"When looking at the external debt service and financial aid package of international financial institutions and taking into account the adjustment that the country has already made, it shows that there is a possible way for the country not to need debt relief under of the Common Framework ".
Angola, moreover, has always said that it would not ask private creditors to restructure its debt, precisely to avoid having its rating revised and risking an exclusion from the financial markets.
"The authorities, when they joined DSSI last year, explained very clearly that they would not involve private sector creditors and complied," acknowledged Aurelien Mali.
Asked about the increase in the public debt to GDP ratio to around 100 percent, the analyst countered that "the debt measured in dollars has decreased in the last three years, from 75.3 billion dollars in 2017 to 65 billion at the end of last year "and added that" the country has made a very commendable effort to adjust public finances ".
In the past, he detailed, "the Government spent 40 to 45 percent of GDP [to pay the foreign debt], and now it spends 20 percent of GDP and despite the extreme impact of the oil shock on public finances, they had a deficit of 1, 7 percent of GDP, so the Government of Angola has demonstrated its capacity to adjust public finances to shocks ".
The economic situation may improve even more, pointed out the Moody's analyst, who this week revised Angola's growth forecast upwards, from 1.2 percent to 2.7 percent, marking the five-year exit of negative economic growth .
"With the budgeted price for oil this year at $ 39, if there is a period with a stable price above that, the situation is expected to improve significantly and an important indicator is the level of reserves; the exchange rate has improved about 10 percent since December, there will probably be more dollars available ", stressed the analyst, recognizing, nonetheless, that there are also risks on the horizon.
"The distribution of vaccines is in the distant future, there may be variants of the virus and the global economic environment may change," he concluded.
