Angola Commits to Payment of Public Debt Following Moody’s Review

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Angola will service both its domestic and external debts, the country’s Ministry of Finance has said. In a report by Macauhub on Monday, the Ministry noted that its commitment to servicing the debts is evident in its inclusion “in the proposal of the General State Budget for 2018 and is supported by the current state treasury levels”.

Moody’s Investors Service (“Moody’s”) had last Wednesday placed the B2 long-term issuer ratings and the senior unsecured rating of the Government of Angola under review for downgrade.

According to Moody’s, the decision was due to the deterioration of the government’s balance sheet and increase in gross borrowing requirements compared with Moody’s expectations in October 2017 when Angola’s rating was downgraded to B2.

“The review period will allow Moody’s to assess the capacity and willingness of the government to address this higher debt burden and to manage the rising domestic and external liquidity risk it faces,” a statement by the investors service said.

Moody’s will consider the government’s ability to deliver on its announced fiscal consolidation plans and the credit risks and benefits posed by the more flexible exchange rate regime. The review will also allow Moody’s to explore any potential implications of the proposed debt renegotiation for private investors.

The investors service would downgrade the rating if it were to conclude that Angola’s government was unlikely to be able to halt and reverse the erosion of its fiscal strength and the resulting rise in liquidity risk.

The southern African country’s Finance Ministry says Moody’s believes in the government’s fiscal consolidation plan and the benefits of the introduction of the new floating exchange rate system.

Angola’s sovereign debt stands at 12.2 billion kwanzas ($58.126 billion) equivalent to 67 percent of the Gross Domestic Product (GDP).

Following Moody’s announcement on Wednesday, Angola’s dollar-bonds fell 1.5 cents the following day, to its lowest since the end of December.

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