IMF cuts Angola economic growth view again, warns about excess debt
he International Monetary Fund cut Angola's economic growth forecast for 2025 to 2.1% from the previous 2.4% on the back of lower oil exports, the IMF said on Friday, and warned that risks have risen from last year with regard to the Southern African nation's capacity to pay its debts.
The IMF said it is critical for Angola to limit its borrowing needs and cut expenses, while greater foreign exchange rate flexibility is also something the country must embrace.
The statement follows an IMF board review of the findings of a staff assessment mission to Luanda in May, when the Fund had already cut Angola's growth outlook for this year from an initial 3%.
"Angola has been hit by volatility in oil prices and sovereign spreads, and weaknesses in oil production in the first half of 2025, amplifying the impact of those shocks," the IMF said.
Like other small, open African economies, oil-exporting Angola has faced challenges this year, when U.S. trade tariffs roiled financial markets.
The IMF said Angola's capacity to repay debt remained "adequate" but warned that risks to that view have increased from last year. It cautioned Angola about following two potentially unsustainable financing options: too much domestic debt and costly short-term external debt.
"Excessive reliance on domestic financing risks further increasing banks' sovereign exposure," the IMF said, while short-term solutions risk "accumulating onerous debt service, potentially undermining investor confidence, and ultimately delaying market access on more favorable terms."
Angola had to pay $200 million in extra security to JPMorgan in April after the price of its bond that serves as collateral for a loan from the Wall Street lender dropped along with other frontier assets.
It later got a refund of the cash when the price of that bond rebounded.
The visit to Luanda by IMF officials in May was technically a Post Financing Assessment, which is reserved for nations with outstanding credit above their quotas that do not have an IMF-supported program or a staff-monitored program.
Angola faces challenges from potentially lower prices of crude oil and tightening external financing conditions, the IMF said after the visit. Its government is also racing to cut the stock of oil-backed loans to China, in an effort to relieve pressure on its finances.
The IMF said it is critical for Angola to limit its borrowing needs and cut expenses, while greater foreign exchange rate flexibility is also something the country must embrace.
The statement follows an IMF board review of the findings of a staff assessment mission to Luanda in May, when the Fund had already cut Angola's growth outlook for this year from an initial 3%.
"Angola has been hit by volatility in oil prices and sovereign spreads, and weaknesses in oil production in the first half of 2025, amplifying the impact of those shocks," the IMF said.
Like other small, open African economies, oil-exporting Angola has faced challenges this year, when U.S. trade tariffs roiled financial markets.
The IMF said Angola's capacity to repay debt remained "adequate" but warned that risks to that view have increased from last year. It cautioned Angola about following two potentially unsustainable financing options: too much domestic debt and costly short-term external debt.
"Excessive reliance on domestic financing risks further increasing banks' sovereign exposure," the IMF said, while short-term solutions risk "accumulating onerous debt service, potentially undermining investor confidence, and ultimately delaying market access on more favorable terms."
Angola had to pay $200 million in extra security to JPMorgan in April after the price of its bond that serves as collateral for a loan from the Wall Street lender dropped along with other frontier assets.
It later got a refund of the cash when the price of that bond rebounded.
The visit to Luanda by IMF officials in May was technically a Post Financing Assessment, which is reserved for nations with outstanding credit above their quotas that do not have an IMF-supported program or a staff-monitored program.
Angola faces challenges from potentially lower prices of crude oil and tightening external financing conditions, the IMF said after the visit. Its government is also racing to cut the stock of oil-backed loans to China, in an effort to relieve pressure on its finances.
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