Fitch revises outlook on Angola to stable, affirms rating at ‘B’

Angola LourencoFitch revised its outlook on Angola to stable. (Image source: Aloysio Nunes/Flickr)Fitch affirmed Angola’s sovereign rating at ‘B’, even as it revised its outlook on the country to “stable” from “negative”

The rating agency cited improvements in the management of foreign exchange and the adoption of a reform agenda as the drivers for its decision.

Joao Lourenco, who replaced Jose Eduardo dos Santos as president in September last year, sacked his predecessor’s children as heads of the state oil company and sovereign wealth fund.

Lourenco has also replaced the central bank governor. Since then, the National Bank of Angola (BNA) moved to a system where the exchange rate is set by bids from commercial banks.

Fitch says that the exchange rate adjustment had eased “tight foreign-currency liquidity” and that it would boost growth in non-oil sectors.

Angola, like other commodity-dependent countries, has been struggling to balance its economy after a slump in oil prices. Oil production accounts for about a third of its GDP according to the World Bank.

Fitch expects Angola’s GDP growth to accelerate to 2.3 per cent in 2018 and 2.5 per cent in 2019 as newer fields replace production from aging ones.

Fitch also expects its fiscal deficit to narrow to 5.4 per cent of GDP in 2017 and further in 2019 as the implementation of a value-added tax comes live.

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