Angola

Servicing its debt cost Angola 16.2% of GDP in 2023 and 12.8% in 2024 but the pressure should ease in 2026. The heavy debt burden was partly caused by the sharp depreciation in 2023, which brought public debt to 72% of GDP. It reduced to 54.6% at end-2024, mostly driven by primary surpluses, strong nominal GDP growth and net external debt repayments of USD1.9bn. It is projected to continue to fall to 48.1% at end-2026. Angola faced a large external repayment due in November 2025 (USD860m) on older USD bonds. In response, authorities moved in several ways to secure payments, including an agreement with JP Morgan to roll over a bond due in end-2025, by issuing two USD-denominated bonds valued at USD1.75bn, enabling repayments of this year’s bonds. Previously, Angola reached a deal with China, its main bilateral creditor, obtaining more flexibility to access funds in the escrow account, lowering debt-service pressure. Since 2002, Angola has borrowed more than USD45bn from China, making up 40% of total external debt, and the nation is currently paying for new projects financed by China in yuan. However, authorities denied intentions to swap existing USD-denominated debt to yuan. A program with the International Monetary Fund is still on the table. 

On the fiscal front, Angola announced plans to cut spending by -5% in 2026 from the previous year, assuming an average oil price per barrel at USD61, supported by the reduction of debt-servicing from 60% of all spending to just below 50%. The overall fiscal balance is still expected to further deteriorate to -2.% of GDP, while the primary balance stood at around 2% in 2025 and is projected to decline to 1% in 2026. Fiscal-consolidation efforts have continued as oil subsidies were further slashed in 2025, increasing diesel prices by +50%. In parallel, a privatization drive is ongoing. 2025 saw the largest ever IPO of Luanda’s stock market, with the sale of 30% of Banco de Fomento Angola (BFA) raising around USD240mn.

After a -44% depreciation since early 2023, the kwanza experienced only a slight depreciation against the USD in 2025, thanks to the greenback weakness. However, the AOAEUR depreciated by 12%, surpassing for the second time in history the 1:1000 EUR/AOA ratio. Rating agencies affirmed Angola’s rating – 6 notches below investment grade – in early 2025; Moody’s downgraded the outlook to stable from positive, due to weak governance, high inflation and FX-denominated debt.

The past months have seen significant social unrest. In July 2025, Angola experienced its worst street protests in decades when the government removed subsidies on diesel. Clashes with security forces left at least 22 people dead and around 200 injured, with over 1,200 people arrested. Fuel subsidies (4% of GDP) have been a huge burden to the budget, costing USD3bn in 2022 – more than the budget for health and education combined.  

Despite Angola’s closeness to China, important steps have been recently taken to increase partnerships with Western-oriented partners, with the Lobito Corridor and commodity wealth at the core. An agreement with the EU was signed in late 2024 as Angola is set to become Africa’s first green hydrogen exporter to Europe and a greater exporter of rare earths. The EU and US are the main backers of the Lobito Corridor, an ambitious infrastructure project to construct and update 2,600km of rail and road lines connecting the mineral-rich regions of Zambia and the DRC to the Lobito port on Angola’s Atlantic coast. The corridor should help the west partially catch up on China’s control of cobalt and copper supplies, key to the energy transition. Angola has recently also signed agreements with the UAE.