Moody’s, Fitch cut Angola’s credit rating deeper into junk

Angola has recently been hit by credit rating downgrades from both Moody’s and Fitch, pushing the country's credit rating further into junk territory. The ratings agencies pointed to a weak currency, low oil prices, and high government debt as the main factors behind the downgrades. Rui Oliveira, CEO at BFA Asset Management, discussed the implications of these downgrades and the country's economic outlook in a recent interview with CNBC Africa. Oliveira highlighted the possibility of Angola issuing another Euro bond in the coming years as a potential solution to manage its government debt. He also mentioned a shift towards more commercial debt borrowing instead of government-to-government loans, which could help attract foreign direct investment and reduce reliance on external currencies. The CEO expressed optimism about Angola's ability to attract more local currency investments and diversify its debt profile, particularly amidst the challenges posed by the ongoing COVID-19 pandemic and fluctuating oil prices. When addressing the issue of debt metrics, Oliveira emphasized the importance of diversification and privatization to strengthen the country's financial standing. He noted that a successful privatization program and increased foreign investor participation could help mitigate further weakening of Angola's debt profile. Discussing the recent monetary policy changes by the Angolan Central Bank, which included raising reserve requirements for local banks, Oliveira pointed out the efforts to attract foreign capital and enhance liquidity in the banking sector. While acknowledging the central bank's initiatives, he suggested that additional measures, such as adjusting interest rates to address inflationary pressures, could further support the country's economic recovery. Looking ahead, Oliveira underscored the need for proactive measures and structural reforms to address Angola's economic challenges and promote sustainable growth. He emphasized the importance of strategic decision-making by the government and financial institutions to navigate the current economic climate and foster investment opportunities in the country.