Moody’s Investors Service said it has downgraded Angola‘s rating by one notch to B3 due to an increased debt burden, offset in part by higher oil revenues.
The rating however comes with a stable outlook, meaning that it will not likely be lowered again soon.
“The stable outlook reflects the broadly balanced credit pressures, with a potential gradual recovery supported by increasing oil production,” Moody’s says.
“Higher oil prices will support the government’s external position and provide some relief to liquidity pressures and debt affordability.”
Reforms initiated by the new government of President Joao Lourenco, in power since September, along with “the potential for a two-year IMF policy coordination instrument (PCI) program should support a return to macroeconomic stability over the medium term,” the ratings agency says.
However, liquidity risks “remain high, driven by government borrowing requirements that will remain around 20% of GDP on average in 2018-19, although planned measures will, if executed successfully, cause this to decline thereafter.”
Angola, the second most important oil producer of sub-Sahara Africa, has faced difficulties for years since petroleum prices plunged in 2014 but recent gains have suggested the tide may be turning.
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