Debt Sustainability Analysis
Angola’s public debt trajectory represents one of the most significant fiscal turnarounds in sub-Saharan Africa. Total public debt has declined from $61.93 billion (59.9% of GDP) down from a peak of 119.1% in 2020. However, the IMF continues to classify Angola’s debt as high risk, reflecting ongoing vulnerabilities to oil price shocks, currency depreciation, and a demanding repayment schedule.
Key Sustainability Metrics
| Indicator | Current | Peak (2020) | Threshold |
|---|---|---|---|
| Debt-to-GDP | 59.9% | 119.1% | 70% (IMF benchmark) |
| Total Public Debt | $61.93B | ~$70B+ | – |
| External Debt | $45.57B | – | – |
| Interest-to-Revenue | 25-30% | 40%+ | 18% (IMF benchmark) |
| Debt Service-to-Exports | 20-25% | 35%+ | 21% (IMF benchmark) |
| FX Reserves | $15.3B | $8-10B | 3 months imports |
While the debt-to-GDP ratio has fallen below the IMF’s 70% benchmark for the first time in years, the interest-to-revenue and debt service-to-exports ratios remain above IMF thresholds, indicating that the debt burden continues to absorb a disproportionate share of government resources.
Drivers of Improvement
The decline from 119.1% to 59.9% has been driven by four factors:
- Nominal GDP growth: GDP growth of 4.4% in 2024 expanded the denominator, with inflation further boosting nominal GDP
- Currency stability: The USD/AOA rate near 914.60 has been relatively stable after the dramatic depreciation of 2018-2020, preventing further debt ratio inflation
- Primary fiscal surplus: The government has achieved primary surpluses since 2022, meaning new borrowing is less than amortization
- Oil revenue recovery: Higher crude prices relative to the 2020 trough have strengthened fiscal revenue
The 2028-2029 Maturity Wall
The most significant near-term risk is the concentration of debt maturities in 2028-2029, when several Eurobond series and Chinese bilateral loans come due simultaneously. Estimated repayments during this window could reach $8-12 billion annually, requiring a combination of:
- New international bond issuance to refinance maturing Eurobonds
- Continued oil-backed amortization of Chinese debt
- Potential maturity extension negotiations with bilateral creditors
- Drawdown of FX reserves if market conditions are unfavorable
The government’s ability to pre-finance this wall through opportunistic Eurobond issuance in favorable market windows is critical. Any deterioration in credit ratings or global risk appetite could significantly increase refinancing costs.
Scenario Analysis
| Scenario | 2028 Debt-to-GDP | Assessment |
|---|---|---|
| Base case (Brent $70-80, stable FX) | 50-55% | Sustainable, declining |
| Oil shock (Brent below $55) | 65-75% | Stressed, potentially rising |
| FX crisis (30%+ kwanza depreciation) | 75-85% | High risk, IMF threshold breach |
| Combined shock (low oil + FX crisis) | 90-100% | Unsustainable without restructuring |
The base case is favorable, but the scenario analysis illustrates the fragility of debt sustainability in a commodity-dependent economy. A repeat of the 2014-2016 oil crash would reverse years of consolidation progress.
Structural Vulnerabilities
- Oil dependence: With 50-60% of fiscal revenue from oil, the budget has limited capacity to absorb commodity price declines
- FX mismatch: Nearly all external debt is USD-denominated while revenue is primarily kwanza-based
- China opacity: Uncertain terms on $17-21B in Chinese debt complicate accurate sustainability modeling
- Contingent liabilities: State-owned enterprise debt (particularly Sonangol) could crystallize on the sovereign balance sheet
- Growth dependency: Sustainability projections assume continued GDP growth and diversification – stagnation would deteriorate ratios
Outlook
The trajectory is encouraging but conditional. Sustained fiscal discipline, continued BNA monetary stability, and oil prices above $60/bbl are prerequisites for maintaining the improvement. The 2028-2029 maturity wall represents the next major test of Angola’s creditworthiness, and successful navigation could catalyze credit rating upgrades toward the B+/BB- range.