Fitch upgrades Angola rating to BB-
Fitch Ratings upgraded oil giant Angola's credit rating by one notch Tuesday to BB-, saying high oil prices and disciplined spending had bolstered the southern African country's stability.
The hike puts Angola one tier below investment grade, or BBB, and will boost its search for commercial loans to help finance the mass of reconstruction projects it has undertaken since the end of its civil war in 2002.
Angola’s economy has grown at breakneck speed since the end of the 27-year war but slowed sharply in 2009 when oil prices dropped during the global economic crisis.
The country fell behind on paying reconstruction contractors and, as foreign reserves plunged, took a $1.4-billion (one-billion-euro) loan from the IMF that came with a package of belt-tightening measures attached.
Fitch sovereign ratings director Veronica Kalema said Tuesday the country’s fiscal discipline since the November 2009 IMF deal had put it back on track.
“The upgrade reflects a strengthened macro policy framework under Angola’s IMF programme, coupled with improved performance buoyed by fiscal and monetary tightening and higher oil prices,” she said in a statement.
“The country was able to overcome the effects of the global financial crisis of 2008-2009 relatively quickly. Substantial contractor arrears were cleared in the first quarter of 2011 and reserves have continued to recover.”
But Fitch warned the country is still vulnerable to oil price shocks and said it needs to diversify its economy, continue rebuilding infrastructure and work to build skills and improve the quality of life for its 18 million people, 40 percent of whom live in poverty.
Angola, a former Portuguese colony, rivals Nigeria for the title of Africa’s largest oil producer. Thanks mainly to crude exports its economy has grown an average 11.3 percent a year since 1994, according to the IMF.
Economy Minister Abraao Gourgel in February forecast seven percent growth for this year and 15 percent growth for 2012.