Debt-to-GDP has halved in four years — from 119.1% in 2020 to 59.9% in 2024 (IMF Article IV, December 2025) — yet the IMF still classifies Angola at high risk of debt distress. That paradox captures the central tension in Angola’s sovereign credit story: the headline ratio has improved dramatically, but the underlying vulnerability — near-total revenue dependence on oil, large external currency mismatches, and opaque bilateral obligations to China — remains unresolved.

Debt Stock Overview

Total public debt stood at $61.93 billion as of Q2 2025, according to Ministry of Finance data published through the Ministerio das Financas quarterly debt bulletin. The stock comprises:

The external-domestic split is significant. Approximately three-quarters of Angola’s public debt is denominated in foreign currencies — predominantly US dollars, with smaller portions in euros, Chinese renminbi, and SDRs. This creates substantial revaluation risk: a 10% depreciation of the kwanza against the dollar mechanically increases the debt-to-GDP ratio by approximately 5-7 percentage points, even absent new borrowing. The 2020 peak of 119.1% was largely a function of kwanza depreciation rather than actual new debt accumulation.

Domestic debt, denominated in kwanza, is held primarily by Angola’s commercial banking sector and the BNA. The domestic market for Obrigacoes do Tesouro (OTs) and Bilhetes do Tesouro (BTs) has deepened through BODIVA, but remains shallow by international standards, with limited participation from non-bank institutional investors.

External Debt Composition

The $45.57 billion external debt stock breaks down by creditor type:

Source: Ministry of Finance Debt Bulletin, Q2 2025.

Commercial and bilateral debt (42.18%). This category is dominated by Chinese bilateral loans — estimated at $17-21 billion in outstanding principal — which are the single largest and most complex component of Angola’s debt profile. The range reflects the opacity of the arrangements: much of the China debt is structured as oil-backed credit facilities (linhas de credito garantidas por petroleo), where repayment is secured against future crude oil shipments through dedicated escrow accounts at China Development Bank and Export-Import Bank of China. These facilities were arranged primarily between 2004-2015 to finance infrastructure construction by Chinese state-owned enterprises.

The exact outstanding balance is subject to debate because: (a) the Angolan government does not publish a full bilateral debt schedule by creditor; (b) early repayments and restructurings have modified original terms; and (c) some facilities involve contingent obligations tied to project completion. The Ministry of Finance has indicated that the China debt stock has declined significantly from peak levels, but independent verification is limited.

Multilateral debt (19.81%). Creditors include the IMF (approximately $4.5 billion under the 2018 Extended Fund Facility and subsequent facilities), the World Bank, the African Development Bank (BAD), and smaller multilateral institutions. Multilateral debt carries the most favorable terms — concessional interest rates and long maturities — and is generally considered the safest tranche of the debt stock from a rollover risk perspective.

Eurobonds (19.67%). Angola has seven dollar-denominated Eurobonds outstanding with a combined face value of approximately $8.96 billion. These are the most visible and liquid component of the external debt, trading on international secondary markets and providing real-time market pricing of Angola’s sovereign credit risk.

Eurobond Maturity Profile

The Eurobond maturity schedule concentrates significant refinancing risk in the 2028-2029 window:

The 2028 and 2029 maturities — totaling approximately $3.5 billion — represent the most immediate capital market challenge. Angola will need to refinance these bonds either through new issuance or from fiscal surpluses and reserve accumulation. At current yields of 8.5-9.0%, refinancing is expensive but feasible; a deterioration in sovereign credit (currently Ba3 at Moody’s, B+ at Fitch) or a spike in US Treasury yields could push Angola’s borrowing cost above 10%, severely compressing fiscal space.

The 2032 and 2049 bonds are more seasoned and trade at higher yields, reflecting longer duration risk and the probability that Angola’s credit profile may deteriorate over multi-decade horizons. The 2049 bond is particularly sensitive to long-term oil price and production assumptions.

Debt-to-GDP Trajectory

The rapid improvement in Angola’s debt-to-GDP ratio is one of the most striking macro stories in frontier markets:

Source: IMF Article IV (Dec 2025), World Bank.

The decline from 119.1% to 59.9% in four years was driven by three factors in roughly equal measure: (1) nominal GDP growth (both real growth and inflation expanding the denominator); (2) kwanza appreciation from its 2020-2021 lows, reducing the dollar-value of external debt relative to local-currency GDP; and (3) genuine fiscal consolidation, with primary surpluses in 2022-2024 that allowed net debt repayment.

Critically, the improvement was not primarily driven by debt reduction in dollar terms. Total external debt has remained in the $43-48 billion range throughout 2020-2025. The ratio improvement came from the denominator (larger nominal GDP in dollar terms as the kwanza stabilized) rather than the numerator (actual debt repayment). This means the improvement is partially reversible: a renewed kwanza depreciation would mechanically push the ratio back up, as occurred in 2018-2020.

IMF Debt Sustainability Assessment

The IMF’s most recent Debt Sustainability Analysis (DSA), published alongside the December 2025 Article IV report, classifies Angola at high risk of debt distress. The key vulnerabilities cited:

Revenue concentration. With oil providing 50-60% of government revenue, a sustained price downturn below $60/bbl would create a fiscal financing gap that could only be covered by additional borrowing, pushing the debt ratio back toward 80-90% within two to three years.

Currency mismatch. Approximately 74% of public debt is denominated in foreign currencies, while roughly 60% of government revenue is generated in kwanza (non-oil tax revenue) or denominated in dollars but vulnerable to volume risk (oil revenue). A 20% kwanza depreciation would add approximately $5-8 billion to the dollar-equivalent debt stock.

Rollover risk. The concentrated Eurobond maturity profile in 2028-2029, combined with ongoing amortization of Chinese bilateral facilities, creates annual gross external financing needs of $5-7 billion. If capital market access were disrupted — by a credit downgrade, a global risk-off event, or an Angola-specific shock — the government would face a severe liquidity challenge.

Contingent liabilities. Sonangol’s corporate debt (estimated at $5-8 billion) is not included in the sovereign debt figures but represents a contingent liability given the state’s 100% ownership. The Sonangol restructuring and partial IPO is intended to ring-fence the company’s balance sheet from the sovereign, but the market continues to price Sonangol risk as quasi-sovereign.

China Debt: The Opacity Problem

Angola’s bilateral debt to China merits special attention because of its scale, structure, and opacity.

The oil-backed credit lines — the dominant instrument — operate as follows: Chinese policy banks (primarily CDB and China Exim Bank) extend dollar-denominated credit to the Angolan government or Sonangol. Repayment is secured by an escrow mechanism under which a portion of Angola’s oil exports (typically Sonangol’s equity crude) is deposited into an offshore account controlled by the Chinese lender. Principal and interest are deducted from oil sale proceeds before the remainder is released to Angola.

This structure has several implications:

• Effective seniority. The oil-backed escrow gives Chinese creditors de facto senior status over other external creditors, including Eurobond holders. In a debt distress scenario, China would continue to receive repayment from oil exports while other creditors would face losses.
• FX leakage. Oil revenue diverted to service Chinese debt does not flow through the BNA’s foreign exchange reserves, reducing the central bank’s capacity to defend the kwanza.
• Data opacity. Neither the Angolan government nor Chinese lenders publish comprehensive data on outstanding balances, amortization schedules, or interest rates. Estimates of $17-21 billion outstanding are derived from academic research, SAIS-CARI (Johns Hopkins China-Africa Research Initiative) databases, and cross-referencing of disbursement and repayment flows.

The government has indicated that the China debt stock is declining as facilities mature and are not renewed. Several credit lines established in the 2004-2010 period have reached final maturity. New Chinese lending to Angola has slowed dramatically since 2017, consistent with the broader trend of reduced Chinese development lending to Africa.

Domestic Debt Market

The domestic debt market — approximately $16.4 billion equivalent in kwanza-denominated instruments — has developed significantly since the BODIVA exchange began facilitating secondary market trading. Key instruments include:

• Bilhetes do Tesouro (BTs). Short-term discount instruments with maturities of 91, 182, and 364 days. The 91-day BT yields approximately 17-18%, tracking the BNA policy rate.
• Obrigacoes do Tesouro (OTs). Longer-dated coupon bonds with maturities from 2 to 15 years. The OT market has expanded considerably, with both fixed-rate (OTNR) and inflation-linked instruments available.
• Obrigacoes do Tesouro Indexadas ao Cambio (OTX). Dollar-indexed treasury bonds that provide FX protection to domestic investors while maintaining kwanza denomination. These hybrid instruments have been popular with banks seeking to hedge currency exposure.

The domestic investor base remains concentrated in commercial banks, which hold approximately 60-70% of the outstanding domestic debt stock. Pension funds, insurance companies, and other institutional investors hold much of the remainder. Foreign participation in the domestic market is minimal, constrained by capital controls and limited kwanza convertibility.

Outlook and Investment Implications

The debt outlook for 2026-2028 hinges on the same variable that dominates every other aspect of Angola’s economic story: oil prices. Under the IMF’s baseline scenario (Brent $73-78/bbl), the debt-to-GDP ratio should remain in the 55-65% range, Eurobond refinancing should be manageable, and the sovereign credit trajectory should be stable to slowly improving.

The downside scenario (Brent sustained below $60/bbl) would push the debt ratio back above 75% within two years, potentially trigger a credit downgrade to single-B territory, and raise questions about Eurobond refinancing capacity in 2028-2029.

For bond investors, Angola’s credit offers high nominal yield (8-9% in dollars on Eurobonds, 17-18% in kwanza on domestic instruments) with commensurate risk. The concentrated oil exposure means that Angola’s credit is effectively a leveraged bet on global energy prices — a profile that appeals to specialist frontier and high-yield investors but poses challenges for benchmark-constrained portfolios.