Moody’s Investors Service raised the outlook on Angola’s Ba3 credit rating to positive from stable based on the nation’s growth outlook and rising oil output.
Growth is “underpinned by the gradual expansion of Angola’s oil and gas sector, which will in turn continue to support the country’s economic diversification and infrastructure development,” the ratings company said in an e- mailed statement from London today. The government will probably continue to boost foreign-currency reserves, which stood at $32.5 billion in June, providing “a credible buffer against economic shocks.”
The economy of the West African nation, Africa’s second- biggest oil producer, will grow 6.8 percent this year, after 3.9 percent in 2010, before slowing to 5 percent in 2013, the International Monetary Fund said on July 17.
Large projects such as Total SA (FP)’s Pazflor deep-water oil- production sites and a new liquefied natural gas facility are coming on-stream and should allow oil output to exceed 2 million barrels a day as early as 2013, Moody’s said. It also expects the recent discovery of large reserves in the Kwanza basin to support oil production.
“Angola’s Ba3 sovereign rating could be upgraded upon the establishment of a fiscal stabilization fund or sovereign-wealth fund large enough to cushion the impact on the government finances of an external shock,” Moody’s said. The country’s key rating constraint is its “very low institutional strength.”
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