Ver Angola


Fitch says Angola needs almost 10 billion dollars this year

The rating agency Fitch said that Angola needs 9.7 billion dollars to meet external financing needs this year, in which the debt to be paid is worth 7.1 percent of GDP.


According to a report on the economies of Africa and the Middle East, sent to investors and to which Lusa had access, data on Angola point to a deficit of 7.5 percent in the current account and financing needs in the amount of $ 9.7 billion, equivalent to 14.6 percent of GDP at the end of last year.

Regarding the debt overdue, Fitch analysts point to a value that is worth 7.1 percent of GDP, that is, a little less than $ 6 billion that the country will have to pay this year.

The table at the end of the report, which gives other data on Angola, also shows that reserves in international currency, at the end of last year, were US $ 17.2 billion, but the value has been decreasing during the first months of this year. year.

The report on the economies of Africa and the Middle East assigns, in this context, a fundamental role to the International Monetary Fund (IMF).

"Since the beginning of the pandemic until June 16, the IMF has approved $ 11.9 billion for emergency balance of payments support", using various modalities, which equate to 7 percent of the financing needs of 26 countries in these two regions monitored by Fitch Ratings.

This figure includes the $ 3.4 billion granted to Nigeria, the first aid since the 1980s, and the package under negotiation with South Africa, which will, if approved, be the Fund's first financing since 1993.

Regarding the Debt Service Suspension Initiative (DSSI), advanced by the G20 for official bilateral debt, Fitch says the deal "encourages private sector involvement, but has so far been limited to bilateral obligations".

Among the countries that have already joined the temporary suspension of debt service advanced by the Paris Club are Cameroon, the Republic of Congo, Ethiopia and Côte d'Ivoire, but other eligible countries, such as Angola, Cape Verde and Mozambique, have not yet signed the debt suspension agreement.

"Other governments, like Benin and Kenya, have said that they will not join DSSI because they feel it could damage ratings and access to capital markets," recalled Fitch.

"Participation in DSSI will provide only limited support for most countries in relation to the total financing needs", considers Fitch, exemplifying with US $ 213.5 million for Mozambique, equivalent to 2.4 of international reserves at the end of last year.

Angola, on the other hand, "is one of those that can benefit the most from DSSI; it has around US $ 2 billion of bilateral debt to be paid between May and December this year, equivalent to 11.2 percent of reserves at the end of the year. last year, but the majority is due to China, so the relief will depend on obtaining an agreement between the two countries ", concludes Fitch.

Fitch worsened Angola's rating in March from B to B-, both below the investment recommendation line, citing, among other factors, the 36 percent depreciation of the kwanza against the dollar during 2019, which led to a rising costs of servicing external public debt, which as a percentage of GDP rose to more than 100 percent.

The Fitch report comes at the same time that the United Nations Economic Commission for Africa (UNECA) has been holding meetings with African finance ministers, following the public discussion that has been going on about how governments can honor commitments and, at the same time, invest in the expenditure necessary to contain the covid-19 pandemic.

The assumption of the debt problem as a central issue for African governments was well reflected in the concern that the IMF and the World Bank dedicated to this issue during the Annual Meetings, which take place in April in Washington, in which they made funds available and agreed a moratorium. in paying the debts of the countries most vulnerable to these institutions.

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