"It is clear that the latest assessment of Angola's credit quality by Fitch shows that the rating will continue to be at the mercy of the evolution of oil prices as long as it has high levels of debt in foreign currency and an overdependence on economic growth based on the oil sector", write analysts from the African department of this British consultancy.
In its analysis of maintaining the rating at B-, with a Stable Evolution Perspective, released last week, Oxford Economics points out that "the financial rating agency, before raising the rating, will need to see a deeper debt reduction, fiscal consolidation, accumulation of foreign currency reserves and improvements in dollar liquidity".
Last week, Fitch announced that it had decided to maintain Angola's rating at B- and the Evolution Outlook at Stable, forecasting growth of 1.8 percent and 2.2 percent this year and next.
"Angola's rating reflects weak governance indicators, high inflation, high levels of public debt in foreign currency and one of the highest levels of dependence on raw materials among the countries evaluated by Fitch Ratings", wrote the analysts in note that the rating was maintained at B-, below the investment recommendation.
In the analysis, the experts from this rating agency owned by the same owners of the consultancy Fitch Solutions explain that "these data are offset by greater international reserves compared to their peers, current account surpluses and manageable debt payment risks due to a positive environment in oil prices over the next two years".
Fitch analysts point out that Angola's GDP is expected to grow 1.8 percent this year and 2.2 percent in 2025, essentially due to the non-oil economy, after last year the economy's growth was just 0.8 percent.
Even so, they point out, "economic growth will be limited by high inflation, partially due to the reform of fuel subsidies, and continued limitations on the internal supply of external currency", writes Fitch Ratings, adding that the rise in prices is expected to be 28 percent on average this year, and 18 percent in 2025, which compares to the average of 15.2 percent last year.
