Sovereigns 

Full Rating Report 
Angola 

Ratings  Rating Rationale
Foreign Currency · Angola’s ratings are supported by the country’s substantial natural resources
Long‐Term IDR B+
Short‐Term IDR B endowment and a strong growth record since the 27‐year civil war ended in
2002. Growth, in turn, has been driven by investment in infrastructure and the
Local Currency oil sector, rising oil production and improved macroeconomic stability.
Long‐Term IDR B+
Investment has been funded by the government’s own financial resources and
Country Ceiling B+  borrowing. Nonetheless, public and external debt ratios remain moderate.
These strengths are counter‐balanced by considerable challenges in terms of
Outlooks  addressing the infrastructure deficiency, strengthening institutions to mitigate
Foreign‐Currency Long‐Term IDR Positive the impact of future oil price shocks and improving the effectiveness of
Local‐Currency Long‐Term IDR Positive  government in services delivery and efforts to foster economic diversification
and development.
Financial Data  · Angola’s real GDP growth of 13.4% on average since the war ended (2003‐2009)
Angola  is the second‐strongest of all Fitch‐rated countries after Azerbaijan (‘BB+’;
(USDbn) 2009 17.7% in 2003‐2009). Following a brief interruption in 2009 when growth slowed
GDP 71.8 to 2.7% due to the oil price shock, the growth trend is expected to resume from
GDP per head (USD 000) 3.9
Population (m) 18.6 2010. Inflation fell from over 100% in 2004 to low double digits since 2006.
International reserves 13.6 Supply‐side bottlenecks need to be addressed sufficiently before inflation can
Net external debt (% GDP) ‐12.7
Central government total debt 31.0
fall much further. Dollarisation also remains high.
(% GDP) · Oil output doubled from 940,000 barrels/day (b/d) in 2003 to 1.9 million b/d in
CG foreign‐currency debt 27.6
CG domestically issued debt 1.0  2009. The sector is well managed, resulting in strong ongoing investment. Angola’s
(AOAbn) huge oil wealth is a fundamental rating strength but the way this is managed to
benefit the broader population will determine the extent of rating improvement.
Analysts  · Rising oil prices and production resulted in strong fiscal and current account
Veronica Kalema surpluses in 2004‐2008. These moved into large deficit in 2009 due to the
+44 20 7417 6336 collapse in oil prices combined with expansionary fiscal policy. Fitch forecasts
veronica.kalema@fitchratings.com
them to move back into surplus from 2010 due to tighter fiscal policy and higher
Richard Fox oil prices. These trends have helped keep public and external debt ratios
+44 20 7417 4357
richard.fox@fitchratings.com 
moderate despite considerable borrowing for infrastructure. Angola agreed a
settlement of its Paris Club arrears in 2006 and paid a final instalment in 2010.
Related Research  Debt to private creditors has been serviced on time. Domestic debt structure
worsened last year but is now improving.
Applicable Criteria
· Sovereign Rating Methodology
· The oil price shock highlighted the need for reforms in macro management.
(October 2009) Macro instability re‐emerged in 2009; defence of the currency by selling FX
Other Research reserves and rationing FX was unsuccessful. The exchange rate was finally re‐
· Global Economic Outlook (April 2010) liberalised in October 2009, resulting in a 19% depreciation for the full year. In
· Sovereign Review and Outlook Q110, the currency continued an orderly depreciation but the parallel exchange
(December 2009)
rate appreciated and converged. Reforms have been anchored by an IMF Stand‐
By Agreement since November 2009. The first review was completed in May.
· Compared with rating peers, it will be much more challenging for Angola to
address social development and other areas such as the skills gap, as the war
has left a legacy of lack of investment in human capital. 
What Could Trigger an Upgrade?
· The Positive Outlook reflects Fitch’s view that the implementation of IMF‐
supported reforms will embed macro stabilisation, improve financial
management and transparency, mitigate the impact of oil price volatility, and
strengthen public and external balance sheets. 

www.fitchratings.com  19 May 2010 

 Sovereigns
Peer Comparison 

Net External Debt  Current Account Balance 
% of CXR  % of GDP 

120  30 
100  20 
80 
10 
60 
0 
40 
­10 
20 
0  ­20 

­20  ­30 
­40  ­40 
2011f 
2010f 
1999 
2000 
2001 
2002 
2003 
2004 
2005 
2006 
2007 
2008 
2009 

2010f 
1999 
2000 
2001 
2002 
2003 
2004 
2005 
2006 
2007 
2008 
2009 

2011f 
General Government Debt  General Government Balance 
% of GDP  % of GDP 
80  15 
70 
10 
60 
50  5 

40  0 
30 
­5 
20 
­10 
10 
0  ­15 

2010f 
1999 
2000 
2001 
2002 
2003 
2004 
2005 
2006 
2007 
2008 
2009 

2011f 
2010f 
1999 
2000 
2001 
2002 
2003 
2004 
2005 
2006 
2007 
2008 
2009 

2011f 

International Liquidity Ratio, 2009  GDP per capita Income, 2009e 
%  At market exchange rates, USA = 100

Nigeria (BB­)  Gabonese Republic (BB­) 

Gabonese Republic (BB­)  Median (BB) 

Angola (B+)  Median (B) 

Median (B)  Nigeria (BB­) 

Median (BB)  Ghana (B+) 

Venezuela (B+)  Venezuela (B+) 

Ghana (B+)  Angola (B+) 

0  200  400  600  800  0  10  20  30  40 

Angola Medians 

Angola
May 2010  2 
 Sovereigns
Rating Factors 

Peer Group Summary: Strengths and Weaknesses

Rating Country Rating factor Macroeconomic Public finances External finances Structural issues
BB Costa Rica Status Neutral Neutral Strength Weakness
El Salvador Trend Positive Stable Stable Positive
Philippines
Note: Relative to ‘B’ categories
Source: Fitch
BB‐ Armenia
Gabon
Lesotho Strengths
Nigeria
Serbia · Angola has huge natural resources wealth: it is the world’s 12th‐largest oil
Uruguay producer and fourth‐largest diamond producer and there are substantial
Vietnam deposits of other minerals which are mined on a small scale or not yet
exploited. Arable land is abundant, although some of it still needs to be de‐
B+ Angola mined.
Cape Verde
Georgia
· Very strong growth rates in recent years reflect rising investment in the oil
Ghana sector and infrastructure, high oil prices and improved macroeconomic stability.
Kenya After a brief interruption in 2009, Fitch expects this trend to resume.
Sri Lanka
Venezuela · Public debt ratios are moderate despite strong borrowing. Recent large fiscal
surpluses and strong growth made for very positive debt dynamics. Reforms
anchored by the IMF programme will help improve macro stability, make public
Rating History finances more resilient to oil price shocks and develop a longer track record of
Long‐Term Long‐Term
sound financial and debt management.
Foreign Local · Gross external debt is moderate compared with rating peers, helped by strong
Date Currency Currency
growth in current external receipts (CXR) and GDP. External debt service ratios
19 May B+ B+
2010 have fallen since 2007 to below the 10‐year peer group median. The country
became a net external creditor in 2006.
Weaknesses
· The monetary and exchange rate framework is weak and underdeveloped.
Inflation and dollarisation remain relatively high.
· In 2009, oil and liquefied petroleum gas (LPG) accounted for around 43% of
output, 63% of government revenue and 98% of merchandise exports. The
economy is therefore exposed to oil price volatility.
· Governance, institutions, social indicators and human capacity are weak
compared with peers, reflecting in part the legacy of the 1975‐2002 civil war.
· The business environment is weak. Although the Angolan government has moved
quickly to address the infrastructure deficiency, there is still much more to be
done and structural reforms are needed to reduce excessive bureaucracy and
other regulatory constraints. The skills deficiency is a longer‐term challenge.
Local‐Currency Rating
The Foreign‐Currency and Local‐Currency Long‐Term IDRs are the same. Although
the domestic debt market accounted for 58% of public debt in 2009, it is still under‐
developed and is not a reliable source of financing. Also, most domestic debt is
denominated in or indexed to foreign currency or CPI, reflecting years of macro
instability. As such, Fitch views the chances of prioritising domestic over foreign
debt repayments as small.

Country Ceiling
The Country Ceiling is the same as the Foreign‐Currency Long‐Term IDR. Since 1999,
Angola has been gradually liberalising the current account, but in 2009
administrative controls were temporarily returned for some current account
transactions. It still has administrative restrictions on capital account transactions.

Angola
May 2010  3 
 Sovereigns
Outlook and Key Issues 
The 27‐year civil war ended in 2002. In 2004‐2008, the government implemented an
extensive infrastructure programme, achieved very strong economic growth
averaging 17.5%, reduced inflation to low double digits, stabilised the currency, and
achieved large fiscal and current account surpluses and an accumulation of
reserves. Rising oil prices enabled the government to pay off most of its Paris Club
debt arrears in 2006 and 2007, a process completed in 2010. The government
received virtually no external assistance in the form of either grants or debt relief
(only USD400m of penalties were forgiven). Public debt has since risen to finance
the infrastructure spend and for liquidity management by the central bank (BNA),
but remained moderate at the end of 2008 at 25.5% of GDP and less than the peer
group median of 33.7% of GDP.
The collapse in oil prices in H208‐Q109 interrupted this impressive performance. In
2009, growth slowed to 2.7%, macroeconomic instability re‐emerged, and the fiscal
and current accounts moved into large deficits despite significant cuts in
government expenditure. USD6bn of reserves were drawn down to finance the
deficit and defend the currency, and contractor arrears increased sharply. The
situation started to stabilise in Q409 following the sustained recovery in oil prices
and re‐liberalisation of the exchange rate. An IMF Stand‐By Agreement was finalised
in November 2009 and was also supportive.
In 2010, Angola faces a more favourable environment in terms of oil prices and the
easing of the global downturn, while the IMF programme will support and anchor
reforms on public finances and monetary and exchange rate policy, which will help
mitigate the impact of future oil price shocks. Growth is estimated by the
government to recover to 8.5%, the budget deficit to narrow to 2.6% of GDP (based
on a conservative budget oil price assumption of USD58/b) and reserves
accumulation to resume. However, infrastructure deficiencies, weaknesses in
financial and macro management, poor governance and business climate remain
formidable challenges.

Public Finances
Government oil revenue comprises taxes directly from international oil companies
(IOCs; roughly 50%) and through the state oil company Sonangol in the form of
profit oil, signature bonuses and net profit tax. In 2009, there was a 60% fall in oil
revenue to USD14.7bn (or 63% of total revenue) from USD35bn in 2008 (81% of
total). In 2002‐2008, oil revenue accounted for 75%‐81% of government revenue.
The severity of the deterioration of the public finances in 2009 was exacerbated by
the fact that the original 2009 budget was already expansionary: it had an oil price
assumption of USD55/b and deficit projection of 7% of GDP. As oil prices fell, a
supplementary budget in July cut the oil price assumption to USD37/b and the
deficit projection rose to 15% of GDP. The final outcome was better: a deficit of
9.1% of GDP, due to an average oil export price of USD57/b, although oil production
was also down due to the OPEC quota cut. The big cuts in expenditure (compared
with the original budget) were on goods and services and capital spending.
The government intended to finance the increased deficit mainly domestically —
drawing down large government deposits and increasing borrowing — and
externally, mainly through project finance. However, as oil prices were well below
the budget assumption for the first half of the year, the government quickly ran
into problems financing a wider deficit. In particular, the government could only
raise about half (USD4.3bn) of what was needed from the domestic debt market as
fixed (non‐market determined) interest rates and increasing macroeconomic
instability decreased the attractiveness of longer‐dated debt. Meanwhile, external
financing draws down on credit lines linked to projects and could not be
accelerated. As such, the government incurred substantial contractor arrears
(USD5.1bn or 7.1% of GDP). Net arrears (excluding Sonangol receivables and the

Angola
May 2010  4 
 Sovereigns
final Paris Club penalty arrears payment) were USD3.4bn (4.7% of GDP), just slightly
Public Finances  lower than in 2008 (5.5% of GDP). Of these, gross operational arrears were
(%)  GGD/GDP  GG B al  USD1.4bn.1
40 
30  Contractor arrears accrued due to the shortfall of funding from the domestic debt
20  market and to procedural delays in financing through some credit lines. They are
10  resulting in layoffs in the construction sector and a squeeze on liquidity and general
0  economic activity. The government expects to pay them from cash balances
­10 
(USD1.5bn), receivables (taxes due from Sonangol, USD2.6bn). For the rest
(USD1bn), it has the options of securitising part of the debt, domestic loan facilities
So urce: M o F, Fitch fo recasts  worth USD500m and access to Chinese credit lines, which became operational in
2010. The government expects contractor arrears to be cleared by the end of H110.
The 2010 budget uses an oil price assumption of USD58/b, giving a deficit of 2.6% of
GDP. Spending rises by just 5% in nominal terms. Further cuts will be made on goods
and services spending by improving the procurement process under a centralised
procurement project and by cutting overheads. The government also plans to phase
in deregulation of the fuel sector over three years and implement tax policy and
administration reforms to raise non‐oil revenue and broaden the tax base. Capital
spending is projected to be USD8.3bn (10.2% of GDP), down from USD11.3bn (13.1%
of GDP) in 2009. There will be an increase in wages and salaries by 31% in nominal
terms due to a substantial increase of health workers and teachers on the
government’s payroll.
In terms of principles guiding expenditure, the government looks at having a surplus
of current revenue over current expenditure. However, this still results in very pro‐
cyclical budgeting. The IMF programme is targeting an eventual reduction in the
non‐oil primary deficit/non‐oil GDP ratio to 25%. It dropped from 75% in 2008 to a
projected 39% in 2010.
Given a Fitch oil price forecast of USD80/b, Angola should achieve an overall
surplus of around 6% of GDP. The government’s planned deficit (at budget oil
prices) will be financed solely by drawing down external credit lines. Proceeds from
a planned Eurobond will be used for balance‐of‐payments support.

Public Debt Management

Headline debt ratios are moderate, compare favourably with the ‘BB’/‘B’‐range
medians and support the rating. However, the debt structure deteriorated last year
and due to a large draw‐down of deposits to finance last year’s deficit, the net
General Government Debt: public debt/GDP ratio rose from 8% of GDP in 2008 to 23% in 2009. 2009 cash
GDP (2009) balances were USD6.3bn. Unlike a number of oil producers, Angola has not put
Angola
savings into an oil stabilisation fund. The government is, however, looking into the
mechanics of a sovereign‐wealth fund which will serve the role of a fund for future
AAA'
generations.
AA'
The domestic debt market is under‐developed and is not yet a reliable source of
A'
financing for the government. Domestic debt comprises short‐term central bank
BBB'
bills for liquidity management and government bonds issued to clear supplier
BB' arrears and finance projects, although in 2009 treasury bill and bond issuance was
B/C/D' to finance the deficit. Treasury bills were introduced in August 2003 and BNA bills
in 1999. Most of the debt outstanding is in the form of foreign‐currency and foreign‐
0 10 20 30 40 50 60 indexed bonds and CPI‐indexed bonds.
(%)
Source: Fitch
Domestic debt rose from the equivalent of USD0.6bn in 2004 to USD11.5bn in 2009.
A big part of the rise to end‐2008 was related to BNA liquidity management. The
cost of BNA bills is borne by the treasury. Consequently government debt maturities

1
Typically operational arrears relating to wages, goods and services and transfers (due to fuel and
water and electricity utilities and transportation subsidies) are accrued every year and paid off
by the end of Q1 of the following year using the previous year’s cash balances after a verification
process 

Angola
May 2010  5 
 Sovereigns
rose to 13.3% in 2008 and 19.7% in 2009, reflecting in large part domestic debt
maturities in 2008 and 2009, greatly increasing refinancing risk. Debt maturities are
far higher than for the ‘BB’/‘B’ peer group.
BNA bills provide the market‐determined reference rate, whereas government bond
yields are not necessarily market determined. The US treasury is providing
assistance to Angola to strengthen debt management. As part of this, the
government will start issuing regularly, and in kwanza (AOA), to build up a yield
curve. This will help the government develop more financing flexibility.
External debt was USD8.6bn or 12.9% of GDP at the end of 2009. It comprised
USD5.6bn of bilateral debt, of which USD4.7bn was bilateral oil‐backed credit
lines2, just USD400m of multilateral debt and USD2.7bn of commercial loans and
supplier loans, of which USD1.2bn is oil‐backed commercial loans3. According to the
BNA, 90% of commercial oil‐backed loans have been phased out. According to Fitch
calculations, the average interest rate on overall public debt ranged between 8%
and 11.4% in 2005‐2009. Public enterprises other than Sonangol do not borrow
externally. The government does not provide guarantees for Sonangol but considers
its debt to be an implicit contingent liability. However, given Sonangol’s strong
asset position, the risk of any contingent liability materialising is extremely low.

Sonangol
Sonangol had assets worth USD21bn in 2008 (25% of Angola’s GDP). In addition to
Sonangol E.P., which is the concessionaire, and Sonangol P&P, an oil operator
involved in exploration and production, it has six other commercial subsidiaries
in the areas of distribution, logistics, aviation, telecoms and shipping as well as
several financial investments. Some of these subsidiaries have investments
abroad. For example, Sonangol P&P is investing in oil and gas in Mexico, Nigeria,
Gabon, Iraq, Iran, Brazil and Cuba. The distribution subsidiary is investing in Sao
Tome, Cape Verde and the Republic of Congo.
Sonangol’s quasi‐fiscal operations involve only the distribution and subsidy of fuel
products, where it uses its countrywide distribution network. It no longer
services the government’s debt.

Angola agreed a settlement of all legacy arrears with the Paris Club in 2006 with no
haircut. Only USD400m of penalty interest was cancelled. It paid off USD2.3bn of
principal and interest arrears in 2006 and 2007 and USD1.8bn of penalty arrears in
three instalments — the last instalment was on 31 January 2010. Angola also settled
arrears bilaterally to non‐Paris‐Club members. Around USD300m of arrears remain,
mainly to the former Yugoslavia (because of difficulties identifying the beneficiary).
Following a domestic arrears regularisation exercise for confirmed pre‐2003 supplier
arrears, USD1.83bn have been paid or securitised and the remaining USD123m are
to be securitised.

Parallel Rate Premium

Monetary and Foreign Exchange Policy
The fall in the oil price (H208‐Q109) and “capital flight” increased demand for FX.
(%) Spread
The BNA responded by tightening liquidity by putting up the banks’ reserve
30
25 requirement to 30%, letting the exchange rate depreciate by 4% in April, rationing
20
15 foreign exchange in Q209‐Q309, and spending around USD6bn defending the
10
5
exchange rate. The parallel rate premium rose from below 3% in April to 27% by end
0 September. In Q409, the BNA normalised the FX market, by freeing up the exchange
‐5
rate and resuming market‐based auctions. This resulted in a 14% depreciation (19%
Jan 09

Mar 09

May 09

Jun 09

Aug 09

Oct 09

Dec 09

Feb 10

2
Source: BNA From China, Brazil and Portugal. These are less onerous than commercial oil‐backed loans.
Quantities of oil are not set but a minimum balance for debt service has to be put in an escrow
account. The government pays this money directly
3
These are supported with escrow accounts which are funded by the proceeds of the oil sales

Angola
May 2010  6 
 Sovereigns
for the whole year). By year‐end, helped by the sustained recovery of oil prices and
Exchange Rates IMF balance‐of‐payments support worth USD341m in November, confidence had
Official BDC
started to return. In Q110, reserves accretion resumed. The exchange rate
(AOA/USD) continued to decline, but in an orderly adjustment, and the parallel market
100 exchange rate appreciated and converged. By end‐March 2010, it was 4.7% above
90 the official rate.
80
The oil price recovery, continued IMF balance‐of‐payments support and implementation
70 of a conservative 2010 budget (budgeted oil price USD58/b versus Fitch forecast
Jan 09

Mar 10
Apr 09

Jun 09

Sep 09

Dec 09

USD80/b) should support a stable currency and further reserves accumulation.

Source: BNA On the monetary policy side, the local interbank market remained very active
throughout the crisis. Interbank interest rates shot up to as high as 22% in Q409. In
February 2010, they remained elevated at 22.6%. The BNA bill/treasury bill (91‐day)
Exchange Rate and rate shot up to 23.3% in December 2009 (from 14.7% in Q109), well above inflation
Official Reserves  of 15%. It stood at 25% in mid‐April. This partly reflects the crowing‐out of BNA bills
Official reserves (RHS) 
by government treasury bills issuance in 2009 and it should start to fall as
Official exchange rate (LHS) 
confidence takes hold.
(A OA /USD)  (USDbn)
The crisis highlighted the need for important structural monetary and exchange rate
95  25 
90  20 
policy reforms, in particular addressing the persistence of dollarisation in the
85  15 
economy. The BNA plans to tighten rules on banks’ FX exposure to 100% of capital for
80  10 
long‐term loans and 40% of short‐term loans from 20% for both long‐ and short‐term
75  5  loans in a scheduled 18‐month process starting in June 2010; to include capital to
70  0  compensate for FX risk in the regulatory solvency ratio; a review of the regulation on
Jan 04  Jul 05  Jan 07  A ug 08  Feb 10  banks’ compulsory reserves, which currently include FX deposits and securities; and
So urce: B NA , IM F IFS  to encourage the government to issue only AOA‐denominated securities.

Balance of Payments
After five years of surpluses averaging 14% of GDP, the current account shifted to a
BNA Bills interest rates Dec large deficit of 10.5% in 2009, due primarily to the fall in oil prices and production.
09‐April 10 Angola has a large structural trade surplus, which was above 50% of GDP in 2005‐
28 days 63 days 2008, but this fell to 26% in 2009. This is offset by a large services deficit (averaging
91 days 182 days 22% in 2004‐2009) and income deficit (14% in 2004‐2009), representing services and
(%) 364 days
dividend payments to the oil sector and increasingly technical assistance as Angola
26
25 hires workers from abroad to bridge its skills gap. Private remittances are not an
24 important source of FX earnings.
23
22
21 The trends on the current account — in particular export revenue — are the main
20 influence driving the overall balance of payments. Fitch expects the current
19
Dec 09 Jan 10 Feb 10 Mar 10 Apr 10
account to improve to a surplus of around 5% of GDP in 2010 due to the rebound of
Source: BNA 
oil prices and an increase in oil production. This should strengthen the overall
balance of payments.
Current Account  Economic Performance and Structural Reforms
Current transfers 
Non‐Oil Sector
Inco me balance 
Services balance 
Non‐oil real growth averaged 14.6% in 2006‐2009. It has been broad‐based, partly
Trade balance  reflecting the recovery of general economic activity after the war, but also very
(% GDP )  Current A cco uo nt B alance  strong investment in infrastructure and its spill‐over effects. In 2006‐2009 — using
50  Chinese, Brazilian, Portuguese and Israeli credit lines, labour and inputs and its own
30  financial resources — the government has spent an average of USD8bn a year on
10 
building or rebuilding roads4, ports5, airports6, railways7 and hydro‐power dams8 as
­10 
4
­30  By 2008, 3,250km out of a total network of 4250km had been completed, providing access to all
provinces
­50 
5
The Luanda, Namibe and Lobito ports are being refurbished or built
6
Domestic airports are being refurbished
So urce: B NA , IM F IFS, Fitch fo recasts  7
Three railway lines are being rebuilt, with the Mocamedes line in the south nearing completion
8
Electricity output rose by 80% from 2004 to 4,050MW in 2008. There is ongoing investment in three hydro‐
power plants, mini hydros and transmission lines

Angola
May 2010  7 
 Sovereigns
well as social housing, schools, universities and hospitals. In Fitch’s view, this scale
Average Real GDP Growth of investment is a key positive for the rating by alleviating severe supply‐side
2006‐2009 bottlenecks in the short run and raising the productive potential of the economy,
Subtitle
Nontradable
and bodes well for the continued strengthening of creditworthiness.
services
Wholesale & Infrastructure needs are still very high. Energy generation and water and sanitation
retail trade
Construction
are the next main focus. A budgetary medium‐term expenditure framework will
Electricity & help in terms of prioritising expansion. Access to international capital markets is
water intended to provide alternative sources of financing.
Manufacturing

Diamonds In addition, structural reforms need to be implemented to improve the weak

Oil & gas
business environment. Problems include excessive bureaucracy, weak legal
Forestry & structure, corruption and the high cost of living due to limited supply of skills,
fishing housing and bottlenecks at the ports as Angola has to import almost all goods and
Agriculture inputs. Much of the bureaucratic constraint is captured in its overall World Bank
0 10 20 30 Ease of Doing Business (WB DBI) rank of 169 out of 183 countries in 2010, while the
Source: Angolan authorities (%)
“trading across borders” ranking of 171 reflects congestion at the ports.
The construction boom should ease some of the housing and transport
infrastructure bottlenecks, and bring down the cost of living. ANIP (the investment
2009 Share of GDP promotion agency) approved domestic and foreign investments in the non‐oil/non‐
minerals sector worth USD1.8bn in 2009 (or 5% of non‐oil GDP), up from USD1.4bn in
Diamonds
Manufacturing
2008. ANIP suggests that the WB DBI does not capture recent changes like the newly
0.9%
6.8% Electricity &
created one‐stop centre. But it does concur that investors want speedier processes
Construction water in attaining visas and less bureaucracy.
8.1% 0.1% 
Nontradable Oil Sector
services Oil sector growth averaged 10.1% in 2006‐2009. Oil production doubled between
8.2% Oil & gas 2003 and 2008 to around 1.9 million b/d, propelling Angola to the world’s 12th‐
Agriculture, 42.5%
forestry & Wholesale &
largest producer in that year according to OPEC. Output fell to 1.77 million b/d in
fishing retail trade 2009 due to OPEC cuts9. Current capacity is around 2.1 million b/d. The government
11.2% 22.3% plans to keep production at around 2 million b/d over the next four years, although
capacity will increase to 2.6 million b/d due to developments from a couple of
Source: Angolan authorities
ultra‐deep water blocks. The country has proven reserves of 13.5 billion barrels
expected to last 19.7 years, but it is still relatively unexplored.10 This natural
resource wealth is a fundamental rating strength.
Power Output 
GWh  Hydro  Thermal  Investment to maintain and increase production was USD49.5bn in 2004‐2008, and
5,000  rose to about USD20bn in 2009 from USD14.1bn in 2008. The IOCs and Sonangol are
4,000  investing in two refineries and in a liquefied natural gas (LNG) project. The LNG
3,000  project, with investment worth USD8bn‐10bn, has a reserve capacity of 5.2 million
2,000  tonnes/year with a reserve life of over 20 years.
1,000 
0  There is respect for contracts, although there can be changes at the margins due to
dynamism of the sector11. Due to the relatively stable legal and operating environment
So urce:  A ngo lan autho rities  of its oil sector and low cost of production12, most of the world’s oil majors are present
in Angola, with Chevron having the longest record of over 50 years.

Political and Social Reforms

Yearly Oil Production There has been relative stability since the war ended in April 2002, and a return to
(000 bpd) civil war is very unlikely. A ceasefire was agreed with some elements of Front for
2,000
9
1,500 OPEC quota shares are linked to capacity. There was a 20% quota cut for Angola in 2009
10
Angola has exploited only two out of five offshore basins. 99% of current production is from the Congo
1,000
basin. Pre‐sample results show good prospects in all other offshore basins. The country also has four
500 onshore and four inshore basins. Between 2004 and 2008, 5.8bn barrels of oil were discovered in Angola
11
Concerns in this regard are new environmental fees that would be higher than international standards
0 and the FX law requiring all money to be put back through the banking system (although more than one
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008

law has been proposed but not passed)

12
Source: Angolan authorities Average cost per barrel is low at around USD5‐6. Average price per barrel is only a small discount below
Brent crude

Angola
May 2010  8 
 Sovereigns
the Liberation of the Cabinda Enclave (FLEC) in the Cabinda region and restiveness
there has been contained to a few opportunistic attacks on foreigners. Unlike in
Nigeria’s Niger Delta, there are no attacks on oil facilities, as Chevron provides a
livelihood for the population as suppliers and through direct employment. The
Cabinda rebels/population want a greater share of the oil wealth and of power, and
this issue has to be addressed over time, to prevent the situation escalating.
President Eduardo Dos Santos has been in power since 1979. A post‐war reformist
government included elements of the opposition UNITA (Union for the Total
Independence of Angola) party in the Government of National Unity and
Reconciliation (GURN). First legislative elections were held in September 2008 in
which MPLA (Popular Movement for the Liberation of Angola) won 81.7% of the
vote. Support for the MPLA government reflected recognition of progress on
addressing infrastructure and ongoing support for ending the war. The opposition is
fragmented and has no alternative policy proposals.
A new constitution was passed in February that concentrates much power in the
presidency. It is a parliamentary system, which means that President Dos Santos
will not have to stand for re‐election until 2012. The system limits political space
but it does provide stability and a strong presidency, which can allow big strides to
be made in infrastructure and development. Future support for the MPLA will
depend on how the government tackles the very high levels of poverty.

Angola: September 2008 National Assembly Election Results

Party Votes (%) Seats
Popular Movement for the Liberation of Angola (MPLA) 81.64 191 (+62)a
National Union for the Total Independence of Angola (UNITA) 10.39 16 (‐54)
Social Renewal Party 3.17 8 (+2)
New Democracy Electoral Union 1.20 2 (+2)
National Front for the Liberation of Angola 1.11 3 (‐2)
Others (9) 2.49 0 (‐7)
Total 100.00 220
a
Footnote: Swing compared with 1992 National Assembly Elections.
Source: Electoral Commission of Angola

Angola’s UN Human Development Index (HDI) ranking is better than those of other
countries in the region, but this is mainly pulled up by its much higher GDP per capita.
Angola also has the advantage of much larger financial resources to address the gaps in
education, health and housing. In recent years, social spending has taken up around
30% of the budget and this level of spending will continue over the medium term. The
government has built the social infrastructure13 and is in the short run hiring foreigners
to work as health workers and train teachers. The government is also building social
housing and industrial parks to provide employment in those areas.

13
The government has built new primary, secondary and vocational schools and universities (in all eight
provinces) and is training teachers using Portuguese and Israeli credit lines and personnel, of whom 30,000
were incorporated into the 2010 payroll. Similarly, it has built new referral hospitals for every capital city
of every province and health centres across the country using credit lines from Spain, Portugal and China,
and is hiring health workers from countries such as Russia, Vietnam, Philippines, Cuba, Brazil and Portugal
to run them. 9,000 new health workers were incorporated into the 2010 payroll

Angola
May 2010  9 
 Sovereigns

Forecast Summary
2006 2007 2008 2009 2010f 2011f
Macroeconomic indicators and policy
Real GDP growth (%) 18.6 23.3 13.8 2.7 8.3 8.0
Consumer prices (annual average % change) 13.3 12.2 12.5 13.8 13.0 10.0
Short‐term interest rate (%)a 6.3 15.0 14.6 23.3 18.0 15.0
General government balance (% of GDP) 11.8 11.3 8.9 ‐9.1 6.0 3.7
General government debt (% of GDP) 14.3 17.9 25.5 32.7 25.1 20.3
AOA per USD (annual average) 80.4 76.7 75.0 79.3 90.0 85.0
Real effective exchange rate (2000 = 100) 191.0 207.2 223.7 249.0 246.5 249.0
External finance
Current account balance (USDbn) 10.7 10.2 6.4 ‐7.5 3.9 6.2
Current account balance (% of GDP) 25.6 16.9 7.6 ‐10.5 4.8 6.1
Current account balance plus net FDI (% of GDP) 25.0 13.9 6.6 ‐11.6 3.9 5.3
Net external debt (USDbn) ‐7.1 ‐9.2 ‐15.7 ‐9.1 ‐13.7 ‐18.7
Net external debt (% of GDP) ‐16.9 ‐15.2 ‐18.7 ‐12.7 ‐16.8 ‐18.5
Net external debt (% of CXR) ‐21.1 ‐20.3 ‐24.2 ‐21.8 ‐25.2 ‐30.4
Official international reserves including gold (USDbn) 8.6 11.2 17.9 13.6 18.4 25.6
Official international reserves (months of CXP cover) 4.5 3.8 3.7 3.3 4.4 5.6
External interest service (% of CXR) 2.4 1.3 2.0 2.5 1.7 0.8
Gross external financing requirement (% int. reserves) ‐203.6 ‐69.5 ‐35.2 67.3 ‐8.5 ‐13.1
Memo: Global forecast summary
Real GDP growth (%)
US 2.7 2.1 0.4 ‐2.4 3.0 2.9
Japan 2.0 2.4 ‐1.2 ‐5.2 1.8 1.6
Euro area 3.0 2.7 0.6 ‐4.7 ‐0.2 2.0
World 3.9 3.6 1.7 ‐3.3 1.4 2.5
Commodities
Oil (USD/barrel) 65.4 72.7 97.7 64.0 80.0 85.0
a
BNA 91‐day bills rate (end year)
Source: Fitch

Angola
May 2010  10 
 Sovereigns
Comparative Analysis: Macroeconomic Performance and Policies 
Angola
2009
Angola Venezuela Gabon Nigeria Ghana ‘BB’ ‘B’
‘B+’ ‘B+’ ‘BB‐’ ‘BB‐’ ‘B+’ median median
Real GDP (5‐yr average % change) 15.8 6.1 2.1 6.5 6.1 4.2 5.9
Volatility of GDP (10‐yr rolling SD) 7.9 8.7 2.2 4.7 1.1 3.1 2.6
Consumer prices (5‐yr average) 15.0 21.7 2.4 11.1 14.3 7.7 9.4
Volatility of CPI (10‐yr rolling SD) 99.5 7.1 2.1 4.5 7.5 3.4 4.3
Years since double‐digit inflation 0.0 0.0 15.0 0.0 0.0 n.a. n.a.
Unemployment rate ‐ 7.5 ‐ ‐ ‐ 8.8 9.5
Type of exchange rate regime Managed float Managed Float Pegged Managed float Managed float n.a. n.a.
Dollarisation ratio 50.8 ‐ 12.3 ‐ 42.2 46.7
REER volatility (10‐yr rolling SD) ‐ 15.8 3.5 6.7 12.2 8.3 7.8
Source: Fitch

Strengths
Real GDP Growth · Angola has a very strong growth record since the war ended in 2002, due to
Angola ‘BB’ median ‘B’ median
rising oil production, reconstruction and the normalisation of economic activity.
The five‐year average of 15.8% is far higher than for rating peers. Nominal GDP
(%)
25 in USD terms rose by 3.6x between 2004 and 2009 to USD71.8bn (USD84.1bn in
20 2008), propelling Angola to the third‐largest economy in sub‐Saharan Africa
15 (SSA) following South Africa (‘BBB+’; USD286bn) and Nigeria (‘BB−’; USD168m).
10
5 Weaknesses
0
· Growth is more volatile than ‘BB’/‘B’ medians due to the volatility of oil prices
2003

2004

2005
2006
2007

2008

2009

2010

and output, which accounted for 43% of GDP in 2009. Oil output will stabilise
Source: Fitch  over the medium term, but a counter‐cyclical fiscal policy buttressed by
accumulated foreign assets could help mitigate the impact of volatile prices on
public spending and therefore on non‐oil sector growth.
Monthly Inflation and BNA · As a result of improved macroeconomic policies, inflation fell from over 100%
Bills rate  before 2004 to an average of 13% in 2006‐2009. The high volatility on a 10‐year
basis partly reflects the wartime legacy. The relatively high ongoing inflation
B NA  ­B ills rate (91 days) 
Inflatio n (yo y) 
reflects supply‐side bottlenecks and the challenge to liquidity management of
(%) 
70 
high oil revenue and spending. The BNA expects average inflation to fall only
60  slightly to 13% in 2010 from 13.8% in 2009 due to increased government
50 
40 
spending and the impact of last year’s exchange rate depreciation.
30 
20 
· There is strong dollarisation in terms of deposits, contracts and payments due
10  to a history of high inflation and a constantly depreciating currency until 2004.
0 
In the recent currency crisis, the dollarisation ratio (foreign deposits/overall
Jan 04  Jul 05  Jan 07  A ug 08  Feb 10 
So urce: B NA 
deposits) rose to 50.8% in December 2009 from 42.1% a year earlier, putting
additional pressure on the exchange rate.
Commentary
Despite a commendable growth record and impressive disinflation, macro
Monthly Dollarisation Ratio
stabilisation is not yet fully entrenched, as evidenced by last year’s crisis.
Foreign deposits/Total deposits Infrastructure bottlenecks partly explain continuing high inflation, but despite
(%)
substantial fiscal deposits, the government’s room for counter‐cyclical fiscal policy
70
was surprisingly limited and domestic contractor arrears increased sharply. Reforms
60
envisaged under the IMF programme will help strengthen budgetary and financial
planning and put the economy in a stronger position to weather future oil price
50 volatility. 

40
Jan 04 Jul 05 Jan 07 Aug 08 Feb 10

Source: BNA

Angola
May 2010  11 
 Sovereigns
Comparative Analysis: Structural Features 
Angola
2009
Angola Venezuela Gabon Nigeria Ghana ‘BB’ ‘B’
‘B+’ ‘B+’ ‘BB‐’ ‘BB‐’ ‘B+’ median median
GNI per capita PPP (USD, latest) 5,020 12,830 12,270 1,940 1,430 8,140 3,810
GDP per capita (USD, mkt exchange rates) 3,865 12,762 7,472 1,016 673 4,588 2,015
Human Development Index (percentile, latest) 21.5 68.6 43.6 13.2 16.5 53.6 38.2
Ease of Doing Business (percentile, latest) 7.7 3.3 13.8 31.9 50.0 52.0 39.6
Trade openness (CXR and CXP % GDP) 63.2 16.5 51.5 40.4 66.2 n.a. n.a.
Gross domestic savings (% GDP) n.a. 26.7 58.6 9.9 9.0 16.9 12.6
Gross national savings (% GNP) n.a. 25.6 39.0 16.0 18.2 19.8 18.8
Gross domestic investment (% GDP) 33.5 23.6 22.1 11.9 25.2 20.6 23.6
Private credit (% GDP) 22.2 20.9 10.7 40.0 29.0 34.6 29.5
BSR Indicators n.a. n.a. D3 n.a. n.a. n.a.
Bank system CAR 16.0 13.8 ‐ 22.5 ‐ n.a. n.a.
Foreign bank ownership (% assets) 46.8 16.6 ‐ 11.8 ‐ n.a. n.a.
Public bank ownership (% assets) 19.3 25.3 ‐ 0.0 ‐ 18.1 20.2
Default record (year cured) 2006a 1999 2005 2005 2005 n.a. n.a.
a
Paris Club agreement to settle arrears in instalments starting 2006. Process completed January 2010.
Source: Fitch and World Bank

Oil Production per Capita Strengths

(barrels/1,000 people)
· Angola is rich in natural resources. It is SSA’s largest oil producer and the
350
world’s fourth‐largest producer of diamonds. Its oil‐sector is well managed, and
300
250
this has enabled a doubling of oil production between 2003 and 2008. Its oil
200
150
production per capita is 104.2 barrels per 1,000 people, on a par with
100 Azerbaijan (‘BB+’) but much higher than Nigeria (‘BB−’).
50
0
· GDP per capita in USD has risen 6x since the end of the war in 2002 to USD3,865
Nigeria

Colombia

Venezuela

‘BBB+’
Gabon
Mexico

Libya
‘BB‐’
Angola
‘BBB’
‘BB‐’

in 2009, slightly below the ‘BB’ median and well above the ‘B’ median.
‘BB’

‘B+’

Weaknesses
Source: Fitch
· Angola’s WB DBI ranking and governance indicators are below the ‘B’ and ‘BB’
medians. But strong progress on reforms and addressing infrastructure suggests
that government effectiveness is improving. On Transparency International’s
GDP Per Capita
Corruption Perception 2009 Index, Angola ranks 162 of 180 countries.
Angola ‘BB’ median
(USD) ‘B’ median · Angola’s HDI index percentile is well below the ‘B’ and ‘BB’ medians but ranks
6,000
10th in SSA, pulled up by higher GDP per capita. Its weak health and education
4,000 indicators are affected by the legacy of the civil war, when there was a lack of
2,000 investment in human capital. Per capita spending on health and education is
now higher than in most countries in SSA. The country has free healthcare.
0
Adult literacy rates are lower than in most Fitch‐rated countries in SSA, but
2002
2003
2004
2005
2006
2007
2008
2009
2010f

enrolment rates are higher.

Source: Fitch 
· The banking system is well capitalised, has relatively low non‐performing loans
(2.5% at end‐2009) and loans/deposit ratio (56.5%). However, the high levels of
Governance Indicators foreign‐currency deposits and foreign‐currency loans (65.3% of credit at the end
2008  of 2009) increase the risks to the banking sector. Financial intermediation is
'B ' Rating M edian  A ngo la  relatively low, with a private credit/GDP ratio at 22%. Recent credit growth
P o litical 
represents lending to the government. The sector is underdeveloped. This and
stability  the fact that it is mostly privately owned — only three banks accounting for
Regulato ry  Go v't 
quality effectiveness  19.3% of assets are publicly owned — reduces contingent liabilities to the
government.

Vo ice and  Rule o f law  Commentary

acco untability  WB governance and business climate indices may understate improvements given
Co ntro l o f 
co rruptio n  the weak starting point and rapid pace of reform. 
So urce: Wo rld B ank, Fitch 

Angola
May 2010  12 
 Sovereigns
Comparative Analysis: External Finances 
Angola
2009 Last 10 years
Angola Venezuela Gabon Nigeria Ghana ‘BB’ ‘B’
‘B+’ ‘B+’ ‘BB‐’ ‘BB‐’ ‘B+’ median median
GXD (% CXR) 51.6 112.7 44.6 32.7 81.7 107.6 100.7
GXD (% GDP) 30.0 19.9 25.7 13.6 51.1 41.4 51.3
NXD (% CXR) ‐21.8 ‐210.9 5.2 ‐44.9 44.0 15.8 29.8
NXD (% GDP) ‐12.7 ‐37.2 3.0 ‐18.7 27.5 7.0 15.9
GSXD (% GXD) 59.1 48.0 73.0 41.5 72.8 49.2 64.2
NSXD (% CXR) 2.8 ‐1.6 0.1 ‐48.8 28.9 9.5 25.0
NSXD (% GDP) 1.6 ‐0.3 0.0 ‐20.3 18.1 2.9 13.6
SNFA (USDbn) ‐1.1 10.3 0.0 34.2 ‐3.0 ‐0.4 ‐1.1
SNFA (% GDP) ‐1.6 2.8 0.0 20.3 ‐18.1 ‐2.7 ‐13.2
Ext. debt service ratio (% CXR) 13.4 13.2 ‐2.0 3.2 8.9 16.6 10.6
Ext. interest service ratio (% CXR) 2.5 5.2 2.8 1.2 3.4 5.0 3.0
Liquidity ratio (latest) 292.0 262.7 538.2 718.3 97.8 135.2 146.8
Current account balance (% GDP) ‐10.5 2.4 12.2 2.6 ‐7.4 ‐2.0 ‐4.0
CAB plus net FDI (% GDP) ‐11.6 1.0 16.2 5.9 ‐2.5 1.5 ‐0.4
Commodity dependence (% CXR, latest) 98.0 82.2 89.1 82.1 34.6 32.8 37.4
Sovereign net FX debt (% GDP) ‐3.1 2.0 0.0 ‐19.1 18.1 ‐ ‐
Source: Fitch

SNFA of Sub‐Investment
Strengths
Grade oil producers 2009 · Angola became a net external creditor in 2006 after paying off most Paris Club
arrears and a strong build‐up of reserves as a result of rising oil output and
(% of GDP) prices. It gained a positive net foreign asset (NFA) position in 2007, reflecting a
50
40
rising portfolio (USD6.5bn by 2008) and direct investment (USD3.5bn) and FX
30 deposits by the banks and private sector (USD15.8bn) abroad. At the end of
20 2008, government and private‐sector assets totalled USD43bn.
10
0 · Fitch estimates that Angola’s NFA position was around 12.7% of GDP in 2009,
‐10 down from 18.7% of GDP in 2008 due to the USD6bn fall in reserves. This is still
Indonesia

Azerbaijan

Gabon
Nigeria

Colombia

Venezuela

much stronger than ‘BB’/‘B’ rating medians, but in line with oil producers,
Egypt
(BB+)
Angola

‘BB‐’
‘BB‐’

(BB+)
‘BB’

(BB+)
‘B+’

which tend to have strong NFA positions. By comparison, Nigeria’s NFA position
in 2008 was 8.7%, Gabon’s 5.1% and Azerbaijan’s 28.1%.
Source: Fitch
· External debt service fell from a peak of 26% in 2004 to 13% in 2009, reflecting
the phasing‐out of commercial oil‐backed loans, which were relatively costly
and short‐term. It also reflects rising exports revenue. Fitch estimates that it
will be between 7%‐9% in 2010‐2011. External debt service has been below the
10‐year ‘BB’/‘B’ medians since 2007. Similarly, the liquidity ratio has been
above 100% since 2007.
Weaknesses
NXD/GDP 2009 (%) Sub‐
· With oil and gas accounting for 97.5% of exports revenue and diamonds 2% in
Investment Grade Oil
2009, the balance of payments is highly vulnerable to commodity price shocks.
10 Consequently following five years of current account surpluses, the current
0 account shifted to large deficit in 2009 due to the fall in commodities prices.
‐10 This put substantial pressure on the overall balance of payments and caused
‐20 reserves to fall as the authorities intervened to support the exchange rate.
‐30
‐40
Commentary
‐50 Between 2006 and 2009, a portion of reserves was invested in equity securities,
debt securities and other investment assets, specifically hedge funds, real estate
Azerbaijan

Egypt 'BB'
Nigeria

Indonesia

Venezuela

Angola
Cameroon

Gabon
‘BB‐’
‘BB‐’

(B+)
'BB+'

'BB+'
‘B+’

funds and private equity funds. As such, usable reserves were lower than gross
'B'

reserves by USD1.2bn (2006) to USD2.55bn (2009). This, however, does not make a
Source: Fitch material difference to the key liquidity and solvency ratios which still compare well
with the ‘BB’/‘B’ medians. 

Angola
May 2010  13 
 Sovereigns
Comparative Analysis: Public Finances 
Angola
2009 Last 10 years
Angola Venezuela Gabon Nigeria Ghana ‘BB’ ‘B’
‘B+’ ‘B+’ ‘BB‐’ ‘BB‐’ ‘B+’ median median
Budget balance (% GDP) ‐9.1 ‐5.7 6.5 ‐2.0 ‐9.7 ‐2.2 ‐2.0
Primary balance (% GDP) ‐6.8 ‐4.3 8.1 ‐2.6 ‐5.7 0.8 0.7
Revenue and grants (% GDP) 32.4 16.8 32.4 19.5 29.2 24.2 30.5
Volatility of revenue/GDP ratio ‐ 22.0 4.1 19.1 12.1 6.2 10.5
Interest payments (% revenue) 7.0 8.2 4.9 6.0 13.6 11.3 7.3
Debt (% revenue) 100.8 104.2 80.7 77.3 199.5 183.1 173.1
Debt (% GDP) 32.7 17.5 26.1 15.1 58.2 40.1 42.4
Net debt (% GDP) 22.8 13.0 20.5 ‐5.2 52.4 34.4 36.2
FC debt (% total debt) 89.3 66.2 71.7 45.9 63.9 62.0 74.8
CG debt maturities (% GDP) 19.7 1.4 3.2 4.0 11.4 5.3 4.7
Average duration of CG debt (years) 5.8 6.7 ‐ ‐ 3.4 8.0
General government if not otherwise specified
Source: Fitch

Capital Expenditure Strengths

(%) Capital spending % of GDP · Fiscal surpluses were strong in 2005‐2008, despite a rapid increase in capital
15 spending from 4% of GDP in 2004 to an average of 13% of GDP in 2006‐2008;
current expenditure rose in real terms but fell from 31% of GDP in 2004 to 25.4%
10
in 2006‐2008 on average. Government deposits rose to 17.4% of GDP in 2008 but
5 fell to 9.9% in 2009 following the oil price shock and a deficit.
0 · Public debt ratios (relative to revenue and GDP) are moderate and below the
‘BB’/‘B’ medians. But they are higher than those for Nigeria and Gabon (two
2004

2005

2006

2007

2008

2009

2010f

2011f

other Fitch‐rated SSA oil‐producing countries). In 2009 the net government

Source: MoF
debt: GDP ratio was around the same level as Gabon’s.
Weaknesses
· Dependence on oil revenue makes the budget vulnerable to oil price volatility.
The government has used a conservative oil price and targeted a current budget
surplus, but fiscal policy has nevertheless proved pro‐cyclical. The 2009 oil
price shock highlights the need for further reforms to strengthen fiscal
management and oil price buffers. The IMF programme aims to reduce the non‐
oil primary deficit/non‐oil GDP ratio to 25% in the medium term. Tax policy and
administration reforms for the non‐oil sector are to be introduced; non‐oil
revenue is only about 8% of GDP. The government plans to make big
expenditure cuts by improving the procurement process and removing subsidies.
· General government debt maturities are large and volatile. They were
extremely large in 2008 (13.3% of GDP) and 2009 (19.7%), reflecting increased
resort to short‐term debt — BNA bills and treasury bills — as the central bank
mopped up excess liquidity in 2008 and then a large deficit had to be financed
in 2009, with long‐term domestic finance very constrained. Debt maturities are
forecast to fall to 6%‐7% in 2010‐2011, still higher than ‘BB’/‘B’ medians.

Net GGD/GDP 2009

Commentary
(%) Angola defaulted on its pre‐1986 external debt during the civil war and was cut off
25 from unsecured private borrowing. However, since the war ended, the government
15
5 and Sonangol have been able to access international debt markets through oil‐
‐5 backed commercial loans and then bilateral loans. The government’s debt service
‐15 record on these loans is good, though the government has still not been able to
‐25
borrow on unsecured terms. It reached an agreement on its Paris Club debt in 2006
Azerbaijan

Nigeria

Venezuela

Angola
Cameroon

Gabon
‘BB‐’
‘BB‐’

(B+)

and arrears were fully cleared in January 2010. There was no haircut. The
'BB+'

‘B+’
'B'

government has a clean domestic debt service record. 

Source: Fitch

Angola
May 2010  14 
 Sovereigns
Fiscal Accounts Summary
% of GDP 2006 2007 2008 2009 2010f 2011f
General government
Revenue 50.2 45.8 50.9 32.4 39.7 38.2
Expenditure 38.4 34.5 42.0 41.5 33.8 34.4
O/w interest payments 1.6 1.1 1.5 2.3 1.0 1.4

Primary balance 13.4 12.4 10.4 ‐6.8 7.0 5.2

Overall balance 11.8 11.3 8.9 ‐9.1 6.0 3.7

General government debt 14.3 17.9 25.5 32.7 25.1 20.3

% of general government revenue 28.6 39.0 50.0 100.8 63.3 53.2

General government deposits 17.3 13.8 17.4 9.9 12.0 12.2

Net general government debt ‐3.0 4.1 8.1 22.8 13.2 8.1

Central government
Revenue 50.2 45.8 50.9 32.4 39.7 38.2
O/w grants 0.0 0.0 0.0 0.0 0.0 0.1
Expenditure and net lending 38.4 34.5 42.0 41.5 33.8 34.4
O/w current expenditure and transfers 25.4 23.0 27.9 28.4 23.6 22.4
‐ interest 1.6 1.1 1.5 2.3 1.0 1.4
O/w capital expenditure 13.0 11.5 14.1 13.1 10.2 12.1

Current balance 24.8 22.8 23.1 4.0 16.1 15.8

Primary balance 13.4 12.4 10.4 ‐6.8 7.0 5.2
Overall balance (accruals basis) 11.8 11.3 8.9 ‐9.1 6.0 3.7
Change in arrears (increase positive) ‐7.9 2.9 5.5 4.7 ‐1.4 ‐0.6
Overall balance (cash basis) 3.9 14.2 14.4 ‐4.4 4.5 3.2

Central government debt 14.3 17.9 25.5 32.7 25.1 20.3

% of central government revenues 28.6 39.0 50.0 100.8 63.3 53.2

Central government debt (AOAbn) 481.6 825.3 1,608.6 1,764.4 1,432.5 1,161.7
By residency of holder
Domestic 120.4 397.6 1,044.8 1124.9 793.3 671.2
Foreign 361.2 427.6 563.8 737.5 1052.5 1073.8
By place of issue
Domestic 120.4 397.6 1,044.8 1124.9 793.3 671.2
Foreign 361.2 427.6 563.8 737.5 1052.5 1073.8
By currency denomination
Local currency 120.4 397.6 1,044.8 189.5 180.2 180.2
Foreign currency 361.2 427.6 563.8 1672.9 1665.6 1564.8
in USD equivalent (eop exchange rate) 4.5 5.7 7.5 17.6 14.7 11.5
By maturity
Less than 12 months (residual maturity) 173.3 300.5 842.8 1124.7 598.1 611.4
Average maturity (years) ‐ ‐ ‐ 3.5 ‐ ‐
Average duration (years) ‐ ‐ ‐ ‐ ‐ ‐
Memo
Non‐financial public‐sector balance (% GDP) ‐ ‐ ‐ ‐ ‐ ‐
Net non‐financial public‐sector debt (% GDP)
Nominal GDP (AOAbn) 3,358.5 4,636.8 6,316.2 5,695.0 7,340.6 8,589.0
Source: Ministry of Finance and Fitch estimates and forecasts

Angola
May 2010  15 
 Sovereigns
External Debt and Assets
(USDbn) 2003 2004 2005 2006 2007 2008 2009
Gross external debt 8.5 9.1 10.4 8.2 10.7 18.1 21.5
% of GDP 61.7 45.9 33.8 19.6 17.8 21.4 30.0
% of CXR 86.1 65.3 42.3 24.4 23.7 27.8 51.6

By maturity
Medium‐ and long‐term 8.5 9.1 10.3 8.1 10.1 15.4 18.2
Short‐term 0.0 0.0 0.1 0.1 0.6 2.6 3.3
% of total debt 0.2 0.2 0.6 1.2 5.8 14.4 15.2

By debtor
Monetary authorities 0.0 0.0 0.0 0.0 0.0 0.4 0.6
Public sector (incl. Sonangol) 8.3 9.0 10.2 7.4 9.6 13.5 12.7
O/w central government 7.0 7.5 6.1 4.1 5.3 7.9 9.4
Banks 0.1 0.1 0.1 0.3 0.9 3.9 4.9
Other sectors (excl. public sector 0.1 0.0 0.0 0.5 0.2 0.6 3.9
corporations)

Gross external assets (non‐equity) 3.3 5.8 8.1 15.2 19.9 33.8 30.6
International reserves, incl. gold 0.6 1.4 3.2 8.6 11.2 17.9 13.6
Other sovereign assets nes 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Deposit money banks' foreign assets 1.3 1.4 1.8 3.1 3.1 6.0 4.6
Other sector foreign assets (including 1.5 3.1 3.2 3.5 5.7 10.2 10.7
Sonangol)

Net external debt 5.2 3.3 2.3 ‐7.1 ‐9.2 ‐15.7 ‐9.1
% of GDP 37.9 16.8 7.4 ‐16.9 ‐15.2 ‐18.7 ‐12.7
% of CXR 52.9 23.9 9.3 ‐21.1 ‐20.3 ‐24.2 ‐21.8
Net sovereign external debt 7.7 7.6 7.0 ‐1.2 ‐1.6 ‐4.4 1.1
% of GDP 55.7 38.4 22.9 ‐2.8 ‐2.7 ‐5.2 1.6
Net bank external debt ‐1.1 ‐1.2 ‐1.5 ‐2.8 ‐2.1 ‐1.7 ‐3.4
Net other external debt 0.0 ‐1.6 0.9 0.3 ‐1.2 ‐4.0 ‐3.5

Net international investment position ‐17.2 ‐16.7 ‐13.1 ‐2.1 3.9 12.9 ‐
% of GDP ‐124.1 ‐84.2 ‐42.7 ‐4.9 6.4 15.3 ‐

Sovereign net foreign assets ‐7.7 ‐7.6 ‐7.0 1.2 1.6 4.4 ‐1.1
% of GDP ‐55.7 ‐38.4 ‐22.9 2.8 2.7 5.2 ‐1.6

Debt service (principal & interest) 2.0 3.9 3.7 5.7 5.5 4.3 5.4
Debt service (% of CXR) 20.7 25.6 12.5 15.2 10.6 5.8 13.4
Interest (% of CXR) 3.5 2.8 2.3 2.4 1.3 2.0 2.5

Liquidity ratio (%) 89.4 53.4 89.1 96.0 239.6 327.1 292.0
Net sovereign FX debt (% of GDP) ‐ ‐ ‐ ‐ ‐ ‐ ‐
Memo
Nominal GDP 13.8 19.8 30.6 41.8 60.4 84.2 71.8
Gross sovereign external debt
Inter‐company loans ‐ ‐ ‐ ‐ ‐ ‐ ‐
Sources: NBP, IMF, World Bank and Fitch estimates and forecasts

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 Sovereigns
Debt Service Schedule on Medium‐ and Long‐Term Debt at end 2009
(USDbn) 2009 2010 2011 2012 2013 2014 2015+
Sovereign (including Sonangol) 2,767.0 1,962.6 1,923.7 2,028.5 1,718.3 1,394.8

Interest 900.0 846.8 369.9 297.6 215.6 154.4

Total sovereign debt service 3,367.0 2,809.4 2,293.6 2,326.1 1,933.9 1,549.2

Private sector (estimated)

Amortisation 1758.9 768.4 1870.6 1870.6 1870.6 1870.6
Interest 140.7 61.5 149.6 149.6 168.3 177.7
Total private debt service 1,899.6 829.9 2,020.2 2,020.2 2,038.9 2,048.3

Memo
Non‐sovereign public sector (Sonangol) 1613.0 1010.2 960.7 941.5 904.9 665.5
Sources: Ministry of Finance, Central Bank and Fitch estimates

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 Sovereigns
Balance of Payments
(USDbn) 2006 2007 2008 2009 2010f 2011f
Current account balance 10.7 10.2 6.4 ‐7.5 3.9 6.2
% of GDP 25.6 16.9 7.6 ‐10.5 4.8 6.1
% of CXR 31.9 22.5 9.9 ‐18.0 7.2 10.1

Trade balance 23.1 30.7 42.9 18.3 29.1 34.2

Exports, fob 31.9 44.4 63.9 40.7 53.4 60.5
Imports, fob 8.8 13.7 21.0 22.4 24.3 26.2

Services, net ‐6.0 ‐12.7 ‐21.8 ‐17.9 ‐16.6 ‐17.4

Services, credit 1.5 0.3 0.3 0.3 0.3 0.4
Services, debit 7.5 13.0 22.1 18.2 16.9 17.8

Income, net ‐6.2 ‐7.6 ‐14.5 ‐7.7 ‐8.4 ‐10.4

Income, credit 0.1 0.6 0.4 0.4 0.5 0.5
Income, debit 6.3 8.2 14.9 8.2 8.9 10.9
O/w: Interest payments 0.9 0.6 1.3 0.9 0.8 0.4

Current transfers, net ‐0.2 ‐0.2 ‐0.2 ‐0.2 ‐0.2 ‐0.2

Memo
Non‐debt‐creating inflows (net) ‐4.9 ‐8.7 ‐8.2 ‐0.5 ‐0.6 ‐0.2
O/w equity FDI ‐3.4 ‐6.8 ‐6.5 1.0 1.0 1.5
O/w portfolio equity ‐1.5 ‐2.0 ‐1.8 ‐1.5 ‐1.6 ‐1.7
O/w other 0.0 6.0 1.1 1.1 1.0 0.0
Change in reserves (‐=increase) ‐5.4 ‐3.0 ‐6.7 6.3 ‐4.8 ‐7.2
Gross external financing requirement ‐5.9 ‐5.3 ‐3.3 12.0 ‐0.1 ‐1.8
Stock of international reserves, incl. gold 8.6 11.2 17.9 13.6 18.4 25.6
Sources: IMF and Fitch estimates and forecasts

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May 2010  18 
 Sovereigns

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