"Moody's decision to change the outlook for developments from stable to positive reflects the assessment that the outlook for robust economic growth and significant revenue growth, supported by high oil prices, gives the government the opportunity to continue to implement reforms that can consolidate its fiscal strength, liquidity and external position, which improves credit quality", reads the note released this evening.
The analysis of the economic evolution perspective is not, however, sufficient for Moody's to have improved the 'rating', which remains at B3, that is, below the investment recommendation, or 'junk', as it is generally known. .
"The decision to affirm the rating at B3 reflects Moody's view that, despite continued improvement in fiscal positions and the current account, Angola's credit profile remains constrained by vulnerability to oil shocks due to its rigid economic structure and weak institutional capacity", write the analysts, acknowledging that "the continuity of the policies and the reform agenda of the new government will naturally take time to reduce Angola's structural vulnerabilities".
The change in the outlook for the rating's evolution indicates that analysts believe that, if the current trajectory is maintained, Angola will see Moody's opinion on sovereign credit quality improved within a period that normally does not exceed 12 months.
The last time Moody's had improved Angola's rating was in September last year, when the sovereign credit quality assessment went from Caa1 to B3, which happened after four consecutive declines, in 2016, 2017, 2018 and 2020.
