S&P Global Ratings on Friday reaffirmed Angola's long-term sovereign credit rating of 'B-' and its short-term rating of 'B', maintaining a stable outlook. The rating agency said the decision balances the country's persistent sensitivity to market conditions and a weaker fiscal position against its foreign currency buffers and projected oil revenues.
Debt servicing and buffers
S&P judged Angola's ability to service its debt to be intact provided there is no major disruption to oil prices or production. However, the agency warned that this capacity could come under pressure if fiscal discipline weakens or if the government increases reliance on local currency borrowing, which would raise debt service costs.
Budgets and political timing
The rating assessment highlights a noticeably more expansionary 2025 fiscal budget relative to recent years, which has raised concerns about potential fiscal slippage. While the 2026 budget shows the Ministry of Finance attempting to rein in expenditures, S&P noted that it remains looser than historical norms. The agency flagged the possibility of further loosening in public finances ahead of Angola's general elections in 2027.
Fiscal forecasts and debt trajectory
S&P projects general government deficits will average 2.6% of GDP annually over 2026-2029, in contrast with average surpluses of 0.2% recorded from 2018-2022. The projected deterioration is attributed largely to higher recurrent outlays, notably on wages, which could reverse some of the improvements in debt vulnerability achieved in recent years.
The agency expects government debt to be stable at about 44% of GDP by the end of the current year before rising thereafter. That level remains well below the 94% peak in 2020. S&P also noted that Angola successfully repaid a Eurobond in November 2025 and faces its next Eurobond maturity of $1.75 billion in May 2028.
External exposure and the oil sector
Angola's economy remains highly exposed to external shocks and developments in the oil sector. S&P highlighted that inflation has been structurally elevated, averaging 23% per year since 2016. Oil output fell by 9.3% in 2025 as a result of aging fields and infrastructure deterioration, with production at 1.06 million barrels per day, down sharply from a 2008 peak of 2 million barrels per day.
The rating agency expects production to hold around 1.1 million barrels per day through 2028. In its baseline, S&P assumes oil prices averaging $60 per barrel in 2026 and $65 per barrel over 2027-2028, which underpin its revenue and external cushion assessments.
Subsidy reform and social response
A government decision in July 2025 to reduce fuel subsidies provoked substantial civil unrest. In response, policymakers adopted a slower, more cautious pace for subsidy removal. S&P also observed that political decision-making in the country remains highly centralized.
Interest burdens and inflation outlook
S&P expects interest payments to average roughly 35% of government revenue between 2026 and 2029. Despite rising debt service tied to Eurobond maturities, the agency forecasts that debt service in 2028 will remain below 50% of government revenue.
On inflation, S&P recorded an easing to an average of 20% in 2025 from 28% in 2024, with year-on-year consumer price inflation at 15.7% in December. The central bank anticipates inflation continuing to decline to about 13.5% by the end of 2026, with a medium-term aim of returning to single-digit inflation.