World Economy

Angola Rating Downgraded

Angola Rating DowngradedAngola Rating Downgraded

Moody’s Investors Service has Sunday downgraded the long-term issuer and senior unsecured ratings of the government of Angola to B2 from B1 and changed the outlook to stable from negative. It also affirmed Angola’s short-term issuer ratings at Not Prime, Cpifinancial reported.  The key drivers supporting the downgrade are: 1) Lower economic strength in light of the diminished medium-term growth outlook, constrained by foreign currency shortages, high inflation, lower public sector spending and a weak banking system. Angola still faces the difficult challenge of diversification away from its heavy reliance on oil. 2) Fiscal strength has materially decreased with indebtedness nearly doubling in the past four years, while liquidity risk remains elevated due to significant gross borrowing requirements. The debt-to-GDP ratio remains vulnerable to further currency devaluation and potential crystallization of contingent liabilities from the public sector. 3) Persisting external pressures in the form of low dollar liquidity and declining net international reserves, despite higher oil prices and a decreasing current account deficit.

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