The credit rating agency said this situation could complicate debt servicing in the “next 12-18 months”, so it is giving it a “CCC+” rating.
At the time, Standard & Poor’s said development prospects were “stable.”
To justify the attributed “rating”, the agency argued that “despite the high oil prices this year, the repayment of high external debt creates concerns about the sustainability of Angola’s debt in the medium term.”
However, the rating agency said that “bilateral debt restructuring agreements with creditors have created some breathing space by 2023”.
In its text, Standard & Poor’s said its “rating” remains “constrained by the significant weight of the government’s external debt service” during its forecast scenario, which runs through 2024.
However, the agency noted that Angola’s bilateral agreements with China and other members of the G20 have created some relief until 2022. The renegotiated agreements include debt deferrals and related interests.
Standard & Poor’s estimates, these agreements reduce the payments Angola must make by the end of 2022 by $2.8 billion to $7.2 billion.
The rating agency noted another immediate relief for Luanda’s leaders, which comes from the recent rise in oil prices, given the dependence of the Angolan economy on this resource.
Oil, determined by Standard & Poor’s, accounts for 20% of Angola’s gross domestic product, 90% of its exports, and 50% of its tax revenue.
S&P Global Ratings expects oil to average $65 a barrel this year, $60 in 2022 and $55 in 2023, which compares, however, to $42 in 2020.
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