London, May 11, 2026 (Lusa) - Fitch Ratings has maintained Angola's credit rating at B- with a stable outlook, while highlighting the risk of "spending slippage" ahead of next year's elections.

"The stable outlook reflects our view that risks to the rating are generally balanced; higher oil prices could generate windfall revenues, supporting fiscal consolidation and external reserves," Fitch stated in a note released on Monday. However, the agency warned that "this upside potential is counterbalanced by the risk of spending slippage, particularly in the context of the approaching 2027 elections."

Analysts said that "the expected recovery in oil production remains uncertain and could potentially offset some of the gains."

Fitch decided to keep the country's creditworthiness at B-, a rating below investment grade, commonly referred to as 'junk', due to "weak governance indicators, high inflation, high levels of foreign-currency government debt, and one of the highest levels of commodity dependence among rated peers."

Conversely, the agency said that "these limitations are offset by current account surpluses and international reserves above the peer average, as well as a declining public debt ratio."

"With the July 2025 protests over fuel prices "highlighting the potential for social unrest, we see an increased risk of pre-election spending spiralling out of control on social transfers and capital expenditure, but we expect broad policy continuity regardless of the election result," they said.

Fitch predicts that international reserves will increase in 2026, providing an adequate external buffer despite large external debt repayments of 3% to 4% of GDP forecast through 2027 and an even higher peak in 2028.

The current account surplus should "increase significantly in 2026, compared to the 0.4% recorded in 2025, due to higher oil prices and production as new oil fields come online."

Regarding the budget, Fitch forecasts that last year's public accounts deficit stood at 4.5% of GDP, with a small primary deficit of 0.4%. The agency anticipates a positive primary budget balance (excluding debt interest payments) this year, driven by increased oil revenues.

Public debt, which stood at 51% of GDP at the end of 2025, should improve to less than 46% this year. Analysts attribute this to primary surpluses and strong nominal GDP growth, though they note that external debt accounts for 72% of the total, exposing the country to exchange rate risks.

Finally, inflation is expected to improve from 12.4% in March to 10% by December. This trend is "supported by the stability of the kwanza, a restrictive monetary policy maintained through a cautious and gradual pace of new interest rate cuts, and fuel subsidies which protect consumers from the impact of oil prices on retail prices."

MBA/RYOL // AYLS

Lusa