LUANDA/NEW YORK, Sept 5 (Reuters) – The International Monetary Fund has revised downward its projection for Angola’s economic expansion in 2025, now estimating growth at 2.1%, down from an earlier forecast of 2.4%. This adjustment follows weaker-than-expected oil export performance, the IMF announced on Friday. The organization also highlighted growing concerns about the country’s ability to manage its debt burden compared to the previous year. n nAccording to the IMF, it is essential for Angola to rein in its fiscal requirements and reduce spending. The institution emphasized that adopting a more flexible foreign exchange regime would support macroeconomic stability. n nThis update comes after an IMF board evaluation of findings from a staff mission that visited Luanda in May, during which time the growth outlook for the current year was already trimmed from an initial 3%. n n”Volatility in global oil prices and sovereign bond spreads, combined with underperformance in crude output during the first half of 2025, have intensified external shocks,” the IMF stated. n nAs a commodity-dependent economy, Angola shares vulnerabilities with other small, open economies across Africa. This year, turbulence in international financial markets—sparked by shifts in U.S. trade policy—has added pressure. n nWhile the IMF assessed Angola’s debt repayment capacity as still within acceptable limits, it noted that downside risks have intensified since last year. The institution advised against overreliance on two forms of borrowing: excessive domestic debt issuance and expensive short-term foreign loans. n n”Heavy dependence on local financing could deepen banks’ exposure to government liabilities,” the report cautioned. Meanwhile, reliance on temporary external funding may lead to “accumulating burdensome repayment obligations, eroding investor trust, and delaying a return to international capital markets under favorable conditions.” n nIn April, Angola was required to post an additional $200 million in collateral to JPMorgan after the value of a bond used as security for a loan declined alongside other frontier market assets. However, the amount was later refunded when the bond recovered its value. n nThe May visit by IMF representatives was classified as a Post Financing Assessment, a review mechanism applied to countries with outstanding IMF credit exceeding their quota but without an active lending program or staff-monitored arrangement. n nThe IMF reiterated that Angola remains exposed to risks from potential declines in crude prices and tightening global financing conditions. At the same time, authorities are working to reduce the volume of oil-backed loans owed to China, aiming to ease fiscal strain. n— news from Reuters
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IMF cuts Angola economic growth view again, warns about excess debt
LUANDA/NEW YORK, Sept 5 (Reuters) – The 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. n nThe 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. n nSign up here. n nThe 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%. n n”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. n nLike other small, open African economies, oil-exporting Angola has faced challenges this year, when U.S. trade tariffs roiled financial markets. n nThe 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. n n”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.” n nAngola 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. n nIt later got a refund of the cash when the price of that bond rebounded. n nThe 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. n nAngola 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. nReporting by Miguel Gomes in Luanda and Rodrigo Campos in New York; additional reporting by Duncan Miriri; Editing by Karin Strohecker and Paul Simao