"Moody's decision to maintain a positive outlook reflects the government's efforts to restore the robustness of public accounts and improve exchange rate management", reads the note released this afternoon in London, in which it is 'B3' rating maintained, below the investment recommendation.
Moody's analysts write that "the government's commitment to maintaining a nearly balanced budget, even in the event of a drop in oil revenues, signals a gradual improvement in governance", so over the next 12 to 18 months Moody's will continue to analyze "if the government can reverse the deterioration in the debt burden witnessed in 2023 and if the exchange rate risk has decreased in a sustained manner".
The maintenance of the opinion on credit quality at 'B3', five levels below the investment recommendation, "reflects the current high level of the weight and cost of debt, as well as a high exchange rate risk", in addition to the slow of the energy transition, as Angola "will take time to reduce its structural vulnerability to shocks in the oil industry, which continues to be a volatile sector".
In the note sent to investors, Moody's considers that State revenues will benefit from the stabilization of oil production at around 1.1 million barrels per day until 2030, a period during which there should be "significant investments in ultra-deep water projects ".
On the other hand, and if there is no new depreciation of the currency like the one that occurred in the first half of the year, in which the kwanza sank by around 40 percent against the dollar, "the increase in the debt burden to 78 percent of GDP in 2023, which compares to 61 percent last year, could be completely reversed by 2025", Moody's economists believe, also predicting that the debt-to-income ratio will fall to less than 250% and the ratio of interest payments and revenues drop to around 20 percent."
Furthermore, they conclude, the level of debt needs should be around 8 percent of GDP in 2024 and 2025, after being 11 percent this year.
