Moody's estimates Angola's public debt to rise to 110% this year

The rating agency Moody's estimates that Angola will end this year with a public debt worth 110% of the Gross Domestic Product (GDP), channeling 28% of tax revenues just to pay the debt.

According to the report that analyzes the evolution of sub-Saharan African economies, sent to investors and to which Lusa had access, Moody's considers that Angola will have a public debt equivalent to 110% of GDP this year and that the share of tax revenues used to service debt will rise from an average of 18% between 2015 and 2019 to 28% this year.

In the report, analysts warn that “currency depreciation will increase the costs of supporting debt and create problems for debt sustainability” in several countries in this region, where foreign currency debt is worth more than 60% of the total.

“Mozambique, Rwanda, Senegal, Republic of the Congo and Angola are particularly susceptible to the increase in the weight of the debt via currency depreciations, with the debt in foreign currency being worth more than 70% of the total volume”, reads in the report, the that Lusa had access, and that puts Mozambique's public debt at 115% this year.

In Angola, Moody's predicts that the kwanza will devalue another 10%, in a context of “challenging government financing conditions, which makes it more expensive to meet financial obligations in foreign currency”.

Regarding the economic recovery predicted by the Government and by several international institutions, Moody's anticipates a 2,5% growth this year in Angola, a country that, together with Nigeria, "will be among the most affected among raw material producers" .

The effects of the covid-19 pandemic in the region, analysts warn, will be “profound and lasting”, not only because of the immediate impact in terms of a drop in economic activity, but also because the main customers of countries exporting raw materials, as is the case of Angola with oil, are buying less.

To this, they add, are added interest rates and financial difficulties in countries: “The persistent budget deficits in a context of low economic growth will keep the debt burden high for sub-Saharan African countries in the medium term”, says the Moody's, which expects the region's average debt to rise to 64% of GDP in the short and medium term, which compares with the average 47% between 2015 and 2019.

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