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Moody’s upgrades Angola rating to Ba3

Ratings agency Moody’s upgraded its credit rating for Angola by one notch to Ba3 Friday on the back of the oil giant’s disciplined spending and return to strong growth.

The hike follows a decision last week by fellow ratings agency Fitch to upgrade Angola one notch to BB-.

Both firms now rate the southern African country one tier below investment grade, a status that will add momentum to its search for commercial loans to help finance the ambitious array of reconstruction projects it has embarked on since the end of its 27-year civil war in 2002.

Both Moody’s and Fitch said the return of high oil prices after a slump during the global financial crisis had boosted Angola’s stability and helped it pay down its debts.

“In view of the forecast oil proceeds, Moody’s expects the balance sheet of the Angolan government to improve substantially to the extent that the country could become a net creditor within the next 12 months,” Moody’s said in a statement.

But it added, “this positive development should not mask the challenges Angola is facing” — including an over-dependence on oil, high inflation, weak governance and a lack of qualified workers.

Angola’s economy has grown at breakneck speed since the end of the war but slowed sharply in 2009 with the global economic downturn.

The country fell behind on paying reconstruction contractors and, as foreign reserves plunged, took a $1.4-billion (966-million-euro) loan from the IMF in November 2009 that came with a package of belt-tightening measures attached.

Moody’s credited the International Monetary Fund with forcing Angola to reduce its dependence on oil and put its macroeconomic house in order.

But it said the country still relies too heavily on oil.

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 IMF data.

Economy Minister Abraao Gourgel in February forecast seven percent growth for this year and 15 percent for 2012.