Angola has a low risk of failing to pay its sovereign debt, thanks to ongoing reforms, according to a recent assessment made by the three main international rating agencies, namely S&P, Fitch and Moody’s.
The three agencies recently made an update and assessment of Angola’s sovereign risk, and confirmed the stabilisation prospect, as a result of ongoing reforms.
In this regard, the Finance Ministry released a press note explaining the ratings produced by the three main agencies, confirming that the stabilisation prospects are the result of ongoing reforms.
The Finance Ministry produced to creditors the steps of its response to the continuous impact of the covid-19 pandemic on the country’s macroeconomic indicators, including its debt management strategies.
On 7 August, following a regular review, S&P Global placed the long and short term rating in local and foreign currencies at CCC+/C, with a “stable” prospect.
The agency considers the country’s successful performance in its relations with official creditors as the most important measure adopted to balance the risks associated with major external fund needs.
On 3 September 2020, Fitch Ratings announced its assessment with a drop in Angola’s Long Term Rating in foreign currency at “CCC”.
Also read: Fitch downgrades Angola to ‘CCC’
The CCC rating means that although the economy remains vulnerable to external shocks, the default risk over a two years period is still low, reads a note that reached Angop.
Fitch also placed Angola’s ceiling limit at B-, a degree higher as compared to the long term rating.
The agency explains this with the country’s low ability to control the exchange rate and other measures that would reduce the private sector’s access to foreign values or pay debts.
For its part, on 8 September 2020, Moody’s announced a fall in the long term rating in local and foreign currency at Caa1, with a “stable” prospect.
According to the Finance Ministry, the rating agency’s assessment shows an unprecedented condition in the Angolan economy and the country’s financial position caused by the global pandemic and the oil prices plunges.
Moody’s considers that, despite all setbacks, the Government has managed to maintain its consolidation effort that, along with ongoing structural reform and multilateral assistance could greatly help reduce the external weaknesses and the liquidity risks in coming few year.
Despite the various rating agencies’ reference to the permanent pressures on the Angolan economy caused by the pandemic and the successive falls in the oil prices, all agencies recognise the significant efforts made by Angolan government in terms of structural reforms, multilateral assistance and progresses scored in the framework of the IMF Programme, the note also reads.