Fitch lowered the long-term rating of Angola to “B-”, due to the country’s dependence on hydrocarbons. The US agency has maintained its rating of Nigeria to “BB-”, but with “negative” outlook.
Having lowered the outlook to “Stable “to” negative “in August, the rating agency Fitch Ratings has just degrade the sovereign rating of Angola to” BB- “to” B + “with a stable outlook. In its report published on September 25, the agency justifies its decision by the effects of dependence on the oil sector in Angola.
Despite an acceleration of the Angolan oil production to 1.83 million barrels per day since the beginning of the year, against 1.7 million in 2014, the black gold during the fall is too high to achieve the objectives of the authorities expect a growth of 4.4% in 2015 – against an increase of 6.6% expected initial. Fitch said for his part that the growth of the country should be that only 3% in 2015 against 4.4% in 2014 and 6.8% in 2013, due to the sharp decline in government revenue (80% dependent on oil ), the uncertainty surrounding oil prices and a lack of liquidity in US dollars.
Addiction to China
The public debt is expected at 40% of GDP in 2015, against 23.1% in 2013, according to Fitch. This increase is explained by the decline of the Angolan GDP and borrowings by the government amounted to about $ 15 billion over the past two years.
The trade balance will be in the red for first time since 2009 because oil exports are subject to lower demand from China, while the Middle Kingdom absorbs 50% of black gold sales of Angola. In these circumstances Fitch estimates the current account deficit from Angola to -7.7% of GDP in 2015.
Stable Outlook
Fitch notes however that the authorities have taken proactive steps to limit the erosion of tax revenues. This includes very conservative forecasts of oil prices ($ 40 per barrel within the budget) of spending cuts and liberalization of gasoline prices.
In addition, the devaluation of 25% of the kwanza against the dollar since the beginning of the year helped limit the melting of foreign exchange reserves, which amounted to $ 24.5 billion in June, against 28 billion in the third quarter 2014.
These are all positive elements that convinced the agency to fix the prospects of note from Angola to “stable”.
Outlook stable Nigeria
In another report published on September 25, Fitch affirmed the long-term rating of Nigeria, the first African economy and the continent’s first oil producer, to “BB-”. His past outlook “stable” to “negative” late March, however maintained at this level.
Fitch notes that first half growth of Nigeria’s GDP stood at 3.1% against an average of 5.6% over the past five years. If the price of oil (60% of government revenues) has obviously affected the Nigerian economy during the first half of the year, the agency also points to the uncertainty of elections last May.
However, Fitch believes that the growth of the Nigerian economy will average 5% in 2016 and in 2017, thanks to the dynamism of the private sector.
Inflation in double digits
The budget deficit is expected to improve to -3.1% this year. This level might have been higher, but the devaluation of February and the accentuation of tax collection efforts helped limit the soaring deficit.
If this devaluation of the naira has maintained reservations currency above 4 months of imports (31 billion dollars), it has severe consequences on the inflation rate, which reached 9.3% in August. The price increase is even expected beyond 10% by the end of the year.
In addition, Fitch affirms fear that Nigeria recorded a current account deficit this year – his first since 1998 -. which should complicate the rebuilding of foreign exchange reserves
Finally, uncertainties about future economic policy of the government and the effects of monetary policy on macroeconomic stability grow analysts Fitch to maintain the rating outlook from Nigeria to “negative”
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