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Chinese debt relief given to emerging markets that are facing the pressure from the Covid-19 pandemic may pose some threats to countries that already have vast amounts of debt owing to facilities. Joining CNBC Africa to unpack debt relief implications for Angola and Mozambique and as well as the Angolan annual budget outlook is Rui Oliveira, CEO at BFA Asset Management.

BFA Asset Management on Angola’s annual budget outlook

LUANDA (Reuters) &#8211; When the Angolan government imposed its coronavirus lockdown in late March, local entrepreneur and innovator Claudio Kiala saw a gap in the market when it came to virtual entertainment.DJ Ritchelly livestreams a show for his fans amid the coronavirus disease (COVID-19) outbreak, in Luanda, Angola, June 17, 2020. REUTERS/Lee Bogata



Kiala and his team had been developing a performance platform known as Soba Channel App, before the crisis struck, where artists would be able to stream live shows and fans would pay to gain access.



The lockdown meant they had to accelerate its launch to help artists earn some income during the lockdown, and give viewers a chance to be entertained in the comfort of their homes.



Soba is the first virtual entertainment platform in Angola, that allows artists to charge for their shows. Social gatherings remain prohibited in the country.



“This pandemic situation led us to accelerate a few of the ideas that we already had and we decided to create the platform where artists could still host concerts and other types of gathering with their fans and be paid for that,” Kiala said.&nbsp;



Popular local DJ Ritchelly was one of the first to jump on the platform after his income was slashed to zero because of the lockdown.



“This virus has brought us a new environment and ways to live. And this is a survival way for artists that want to keep doing their job,” Ritchelly said, as he prepared for his virtual live performance via the app.



Fans, stuck indoors, are happy to pay between $2-$6 per hour depending on the performer, to see their favourite artists.



“It gives me a better experience because I’m alone. I don’t have to listen to the other people screaming (like at outdoor live shows). I just have to sit there and watch,” said 17-year old Ekumbi Dias.



Performers keep 90% of the ticket costs, a business approach Kiala says is noble but necessary.

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The African entrepreneur who made it by streaming sweet music to the locked down.

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Angola lifted its Covid-19 state of emergency last week and has reopened businesses at 50 per cent capacity, as the economy faces the economic fallout from the global pandemic. The Angolan government has injected around 200 billion kwanzas into the economy, mostly through quantitative easing and Rui Oliveira, CEO at BFA Asset Management joins CNBC Africa for more.

COVID-19: Angola begins partial reopening of economy

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Rui Oliveira, CEO at BFA Asset Management joins CNBC Africa to unpack African Lusophone countries response to the Covid-19 pandemic as well as these countries monetary responses to aid the economy during the current social and financial crisis.

BFA Asset Management on Lusophone Africa’s COVID-19 response plan

By Zandre Campos, CEO of ABO Capital.



As the coronavirus outbreak continues to spread, no country is immune. Global cases are well into the millions and Africa is continuing to see a rise. There are several African countries <a href="https://coronavirus.jhu.edu/map.html">whose numbers are rapidly increasing</a> including Algeria, Egypt, Morocco, and South Africa. However, their numbers are still relatively low compared to some of the hardest-hit countries, such as the United States, Russia, the United Kingdom and Italy. In my homeland of Angola, we have been very fortunate to have less than 50 reported cases to date. However, despite the swift actions taken by the country to keep the rate of infection relatively low, its role in the global economy means it is still at risk. Angola must prepare for when travel and trade resume at full speed, as it will be critical to remain vigilant and prepared. 



The cost of the coronavirus, if it becomes more widespread, will not only be to the health of Angolans, but to its economy, as seen in the latest Ebola epidemic. During the Ebola epidemic of 2014 to 2016, there were approximately 28,600 cases and 11,300 deaths<a href="#_ftn1">[1]</a>. In addition to the devastatingly large loss of life, Ebola contributed significantly to economic hardships in the countries that were most impacted, ie, Guinea, Sierra Leone, and Liberia.



For more COVID-19 coverage visit <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>



In 2014, the World Bank projected that the three nations would in 2015 lose approximately $2.2 billion in their gross domestic product. The primary donors in the international response, the United States, the United Kingdom, and Germany, donated a combined total of over $3.6 billion in relief efforts. The sectors most greatly affected were the private sector, agricultural production, and cross-border trade as restrictions on movement, goods, and services were put in place<a href="#_ftn2">[2]</a>. Not only did this hurt the GDP and the economy, but it had a direct impact on the lives of those in affected regions. While a slowdown in these sectors leads to a loss of jobs and job security, it often impacts the most vulnerable in society first. Decreased agriculture and trade can cause food shortages, which have a direct impact on low income individuals and their ability to have access to food.



if Angola fails to remain diligent and keep the rate of infection relatively low, it could come at a severe economic cost as shown by countries that had Ebola, therefore different industries need to step up to help the relief efforts. While some industries are being negatively impacted by the coronavirus, they can also do a number of things to help. For example, Angola’s oil and gas industry has been hard hit by the coronavirus. As people across the world shelter in their homes, the price of oil has been consistently dropping and the industry is facing a significant downturn. However, there are a number of ways that those in the industry can assist Angola and the challenges it is facing caused by coronavirus.



For one, many companies have and can donate to the World Health Organization’s COVID-19 Solidarity Response Fund, which purchases and ships protective equipment for medical workers. The fund also puts money towards research to develop a vaccine for the virus. In addition to donating to relief funds, many companies have and can turn their focus to producing products that can be useful in the fight against the coronavirus. Some of the materials that are used in fuel production, such as ethanol from sugarcane, can be made into disinfectant instead. Oil and gas companies can shift their production in other ways as well. For those with major factories, if the resources are available, they can produce not only disinfectants, but face masks and protective gear too.



Despite the downturn that the oil and gas industry is currently facing, there are other ways that companies can provide relief in multiple ways. For example they can follow the example of those offering free fuel to service vehicles, while others are giving fuel cards or fuel vouchers to service workers. Angola’s oil and gas industry is a crucial component of the economy. While it is in a vulnerable position right now, this doesn’t mean that companies aren’t able to shift their focus, and their resources, in a way that combats the coronavirus.



While most businesses and industries in Angola will weather the coronavirus pandemic, and even come out stronger on the other side, it highlights the need for an improved education system to be put in place. The coronavirus pandemic draws attention to the fact that the country does not have enough doctors or medical professionals. Angola will have a shortage of doctors if the youth of Angola aren’t getting the best possible education. The need for a highly trained medical community may be brought to light due to current issues, but it will not go away after this virus does. Angola must utilise the scope and knowledge of its ancestors to help in developing other sources of knowledge or solutions.



What is clear is that while the coronavirus might not be going away any time soon, it is presenting an opportunity for companies to mobilise in inspiring ways to help the best that they can. With the ability to come together to provide much-needed materials such as disinfectants and face masks, and the more traditional output of fuel, there is hope in our fight against the global health pandemic. In addition, there are many lessons that we can learn from the past including how to stabilise the economy, keep each other safe, and ultimately make Angola a stronger country.



[1] <a href="https://www.cdc.gov/vhf/ebola/history/2014-2016-outbreak/index.html" target="_blank" rel="noreferrer noopener">https://www.cdc.gov/vhf/ebola/history/2014-2016-outbreak/index.html</a>



2 <a href="https://www.cdc.gov/vhf/ebola/history/2014-2016-outbreak/cost-of-ebola.html#N3" target="_blank" rel="noreferrer noopener">https://www.cdc.gov/vhf/ebola/history/2014-2016-outbreak/cost-of-ebola.html#N3</a>



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<a href="#_ftnref1">[1]</a> <a href="https://www.cdc.gov/vhf/ebola/history/2014-2016-outbreak/index.html" target="_blank" rel="noreferrer noopener">https://www.cdc.gov/vhf/ebola/history/2014-2016-outbreak/index.html</a>



<a href="#_ftnref2">[2]</a> <a href="https://www.cdc.gov/vhf/ebola/history/2014-2016-outbreak/cost-of-ebola.html#N3" target="_blank" rel="noreferrer noopener">https://www.cdc.gov/vhf/ebola/history/2014-2016-outbreak/cost-of-ebola.html#N3</a>

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Op-Ed: How Angola can use its industries to fight COVID-19

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With South Africa, Nigeria, and Angola expected to plunge into deep recessions this year, does Sub-Saharan Africa still offer value for money for foreign investors in Covid-19 times?

Where to invest in SSA amid the coronavirus crisis

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Angola is on the edge of tightening its Covid-19 lock-down restrictions as the number of confirmed cases rise to 35.

Angola plans to strengthen lock-down restrictions as Covid-19 cases rise

By Akinwumi Adesina, President of the&nbsp;<a rel="noreferrer noopener" href="https://www.afdb.org/en" target="_blank">African Development Bank</a>



These are very difficult days, as the world faces one of its worst challenges ever: the novel coronavirus pandemic. And it seems almost no nation is spared. As infection rates rise, so does panic across financial markets, as economies drastically slow down, and supply chains are severely disrupted.&nbsp;



Extraordinary times call for extraordinary measures. As such, it can no longer be business as usual.&nbsp;



FOR MORE ON COVID-19 VISIT:&nbsp;<a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>



Each day, the situation evolves and requires constant reviews of precautionary measures and strategies. In the midst of all this, we must all worry about the ability of every nation to respond to this crisis. And we must ensure that developing nations are prepared to navigate these uncharted waters fully.&nbsp;



That&#8217;s why I support the UN Secretary-General Antonio Guterres&#8217; urgent call for special resources for the world&#8217;s developing countries.&nbsp;



In the face of this pandemic, we must put lives above resources and health above debt. Why? Because developing economies are the most vulnerable at this time. Our remedies must go beyond simply lending more. We must go the extra mile and provide countries with much-needed and urgent financial relief &#8211; and that includes developing countries under sanctions.&nbsp;



For decades, sanctions have decimated investments in public health care systems in quite a number of countries<a href="#_ftn1">[1]</a>.&nbsp;Today, they are unable to face up to a clear and present danger that now threatens our collective existence<a href="#_ftn2">[2]</a>.



Only those that are alive can pay back debts.&nbsp;&nbsp;



Sanctions work against economies but not against the virus. If countries that are under sanctions are unable to respond and provide critical care for their citizens or protect them, then the virus will soon &#8220;sanction&#8221; the world.



In my Yoruba language, there is a saying, &#8220;be careful when you throw stones in the open market. It may hit a member of your family.&#8221;&nbsp;&nbsp;



That&#8217;s why I also strongly support the call by the UN Secretary-General that debts of low-income countries be suspended and in these fast-moving and uncertain times.&nbsp;



But I call for even bolder actions, and there are several reasons for doing so.&nbsp;



First, the economies of developing countries, despite years of great progress, remain extremely fragile and ill-equipped to deal with this pandemic. They are more likely to be buried with the heavy fiscal pressure they now face with the coronavirus.&nbsp;



Second, many of the countries in Africa depend on commodities for export earnings. The collapse of oil prices has thrown African economies into distress. They simply are not able to meet budgets as planned under pre-coronavirus oil price benchmarks<a href="#_ftn3">[3]</a>.



The impact has been immediate in the oil and gas sector, particularly affecting eight countries -Algeria, Angola, Chad, Egypt, Equatorial Guinea, Gabon, Nigeria, and the Republic of Congo- that between them generate nearly half of Africa&#8217;s GDP<a href="#_ftn4">[4]</a>.&nbsp;



Those exporting other commodities besides oil, such as agricultural produce or minerals and metals, are facing drastic cuts in demand<a href="#_ftn5">[5]</a>. In the current environment, there is an acute shortage of buyers who, for understandable reasons, have re-allocated resources to addressing the COVID-19 pandemic. African countries that depend on tourism receipts as a key source of revenue are also in a straight-jacket.&nbsp;



Third, while rich countries have resources to spare, evidenced by trillions of dollars in fiscal stimulus, developing countries are hampered with bare-bones resources.&nbsp;



The fact is, if we do not collectively defeat the coronavirus in Africa, we will not defeat it anywhere else in the world. This is an existential challenge that requires all hands to be on deck. Today, more than ever, we must be our brothers and sisters&#8217; keepers.&nbsp;&nbsp;



Around the world, countries at more advanced stages in the outbreak are announcing liquidity relief, debt restructuring, forbearance on loan repayments, relaxation of standard regulations and initiatives. In the United States, packages of more than $2 trillion have already been announced, in addition to a reduction in Federal Reserve lending rates and liquidity support to keep markets operating. In Europe, the larger economies have announced stimulus measures in excess of 1 trillion Euros. Additionally, even larger packages are expected.&nbsp;



As developed countries put in place programs to compensate workers for lost wages for staying at home for social distancing, another problem has emerged &#8212; fiscal distancing.



Think for a moment what this means for Africa.&nbsp;



The African Development Bank estimates that COVID-19 could cost Africa a GDP loss between&nbsp;$22.1 billion (see attached Bank report), in the base-case scenario, and $88.3 billion in the worst-case scenario. This is equivalent to a projected GDP growth contraction of between 0.7 and 2.8 percentage points in 2020. It is even likely that Africa might fall into recession this year if the current situation persists.



The Covid-19 shock will further squeeze fiscal space in the continent as deficits are estimated to widen by 3.5 to 4.9 percentage points, increasing Africa&#8217;s financing gap by an additional $110 to $154 billion in 2020.&nbsp;



Our estimates indicate that Africa&#8217;s total public debt could increase, under the base case scenario, from $1.86 trillion at the end of 2019 to over $2 trillion in 2020, compared to $1.9 trillion projected in a no-pandemic scenario. These figures could reach $2.1 trillion in 2020 under the worst-case scenario.



This, therefore, is a time for bold actions. We should temporarily defer the debt owed to Multilateral Development Banks and International Financial Institutions. This can be done by re-profiling loans to create fiscal space for countries to deal with this crisis.&nbsp;&nbsp;



That means that loan principals, due to International Financial Institutions in 2020, could be deferred. I am calling for temporary forbearance, not forgiveness. What&#8217;s good for bilateral and commercial debt must be good for multilateral debt.



That way, we will avoid moral hazards, and rating agencies will be less inclined to penalize any institution on the potential risk to their Preferred Creditor Status.&nbsp; The focus of the world should now be on helping everyone, as a risk to one is a risk to all. There is no coronavirus for developed countries and a coronavirus for developing and debt stressed countries. We are all in this together.&nbsp;&nbsp;



Multilateral and bilateral financial institutions must work together with commercial creditors in Africa, especially to defer loan payments and give Africa the fiscal space it needs. We stand ready to support Africa in the short term and for the long haul. We are ready to deploy up to $50 billion over five years in projects to help with adjustment costs that Africa will face as it deals with the knock-on effects of COVID-19, long after the current storm subsides.&nbsp;



But more support will be needed. Let&#8217;s lift all sanctions, for now. Even in wartime, ceasefires are called for humanitarian reasons. In such situations, there is a time to pause for relief materials to reach affected populations. The novel coronavirus is a war against all of us. All lives matter. For this reason, we must avoid fiscal distancing at this time. A stitch in time will save nine.&nbsp;&nbsp;



Social distancing is imperative now. Fiscal distancing is not.&nbsp;&nbsp;&nbsp;







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<a href="#_ftnref1">[1]</a>&nbsp;(<a href="https://www.odi.org/publications/384-impact-economic-sanctions-health-well-being" target="_blank" rel="noreferrer noopener">https://www.odi.org/publications/384-impact-economic-sanctions-health-well-being</a>, page 15)



<a href="#_ftnref2">[2]</a> (<a href="https://www.ghsindex.org/" target="_blank" rel="noreferrer noopener">https://www.ghsindex.org/</a>)



<a href="#_ftnref3">[3]</a> AEO 2020&nbsp;<a href="https://www.afdb.org/en/knowledge/publications/african-economic-outlook" target="_blank" rel="noreferrer noopener">https://www.afdb.org/en/knowledge/publications/african-economic-outlook</a>)



<a href="#_ftnref4">[4]</a> (AEO 2020&nbsp;<a href="https://www.afdb.org/en/knowledge/publications/african-economic-outlook" target="_blank" rel="noreferrer noopener">https://www.afdb.org/en/knowledge/publications/african-economic-outlook</a>)



<a href="#_ftnref5">[5]</a> <a href="https://www.opec.org/opec_web/en/press_room/5870.htm" target="_blank" rel="noreferrer noopener">https://www.opec.org/opec_web/en/press_room/5870.htm</a>&nbsp;&#8211; <a href="https://edition.cnn.com/2020/03/08/investing/oil-prices-crash-opec-russia-saudi-arabia/index.html">https://edition.cnn.com/2020/03/08/investing/oil-prices-crash-opec-russia-saudi-arabia/index.html</a>

adesina

Op-Ed: Why the COVID-19 pandemic is no time for fiscal distancing

New York, March 31, 2020 &#8212; Moody&#8217;s Investors Service (&#8220;Moody&#8217;s&#8221;) has today placed Angola Government&#8217;s B3 long-term issuer ratings and senior unsecured rating and its (P)B3 senior unsecured MTN rating under review for downgrade. The short-term issuer rating is affirmed at Not Prime (NP).



The decision to place Angola&#8217;s ratings on review for downgrade is prompted by the magnitude of the shock from the sharp drop in oil prices and an acute tightening in global financing conditions on Angola&#8217;s already weak public finances and external position, and elevated government gross borrowing requirements. Weak governance, notwithstanding a number of reforms implemented in recent years, undermines the government&#8217;s capacity to respond to this shock and is a driver of this rating action.



The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. For Angola, the shock mainly transmits through a further weakening in the currency that raises the debt burden and debt service; a significant drop in revenues that is likely to prevent the government from pursuing its debt management strategy of paying down short-term debt and reducing rollover risk; and pressure on an already fragile balance of payments.



The review period will allow Moody&#8217;s to assess the overall policy response to the shock and the capacity of the authorities to manage: 1) the additional stress on public finances and the government&#8217;s balance sheet driven by the significant loss of oil-related revenues and a potential further depreciation of the currency; 2) the severity of the increase in external vulnerability given the expected sharp drop in oil export receipts putting pressure on foreign currency reserves; 3) the rising risks associated to large domestic and external debt service payments in a currently dislocated credit market.



Concurrently, all Angola&#8217;s country risk ceilings remain unchanged: Foreign Currency bond ceiling at B2, Foreign Currency deposit ceiling at Caa1, and Local Currency bond and deposit ceilings at Ba3.



RATINGS RATIONALE



RATIONALE FOR INITIATING A REVIEW FOR DOWNGRADE ON ANGOLA&#8217;S B3 RATINGS



As a result of the oil price fall in the face of depressed oil demand and a slow supply response, Moody&#8217;s now assumes that oil prices will average US$40-45 per barrel in 2020, and US$50-55 by 2021, around $20 and $10 below previous expectations in each year.



As a large oil exporter, Angola heavily relies on the oil sector as a source of government revenue (62% of total revenue in 2019) and exports (96%). Such a fall in oil prices heightens the pressure on Angola&#8217;s already weak fiscal and external metrics.



ANGOLA&#8217;S WEAK CREDIT METRICS ARE LIKELY TO DETERIORATE FURTHER, TO AN EXTENT PARTLY DETERMINED BY THE GOVERNMENT&#8217;S CAPACITY TO RESPOND



Angola&#8217;s credit profile is weakened by the oil price shock which negatively affects the government&#8217;s balance sheet and the country&#8217;s external position, through a significant loss of government revenue and export proceeds respectively. Also, the Covid-19 related spending to prevent the spread of the virus throughout the country is expected to further aggravate the fiscal deficit.



Already, Angola&#8217;s fiscal and external metrics are very weak. General government debt increased to an estimated 100.5% of GDP in 2019, from 81% in 2018, and debt-to-revenue was around 500% from 371% respectively. Similarly interest payment-to-revenue exceeded 25% in 2019 against 20.7% a year before. On the external side, vulnerability relates to low net foreign exchange reserves at $11.8 billion at the end of 2019, covering around 6 months of imports of goods and services and external debt amounting to about twice the level of current account receipts this year, according to Moody&#8217;s estimates.



Angola is unlikely to be able to significantly increase its oil production that has been in a secular decline for the last 4 years to offset the price drop. Moody&#8217;s estimates that a $10/barrel decrease in oil price leads to a $2$2.5 billion loss in government revenue (around 3% of 2019 GDP) and a $5 billion fall in exports receipts.



The 2020 budget which was designed to post a small surplus (0.8% of GDP), was passed with a $55/barrel oil price assumption. It would have contributed to a slightly positive balance of payments after International Financial Institutions&#8217; (IFIs) disbursements of concessional loans. As a result of the price fall, Angola&#8217;s fiscal and external accounts will be in deficit, raising pressure on the exchange rate and foreign exchange reserves and incentivizing economic transactions in the parallel exchange rate market.



A budget no longer likely to be in surplus and further pressure on the currency are likely to raise the already very high debt burden. In turn, the government&#8217;s borrowing requirements are likely to increase again in 2020 having fallen to 15% of GDP in 2019 (including clearance of arrears to goods and services suppliers), at a time when international and possibly domestic financing comes at very high costs. Given the current dislocation in credit markets, it will be increasingly challenging for the government to secure financing at affordable costs. Previous objectives, including an ongoing debt management strategy aimed at repaying short-term debt and lengthening its debt maturity and the maintenance of net international reserves above $10 billion have also become far less achievable.



The impact of the oil price shock will be attenuated by the fact that the government posted a small deficit on the budget estimated at 0.3% of GDP and a current account surplus estimated at 4% of GDP in 2019. This is due to the implementation of a vast array of reforms, and strong consolidation efforts under the $3.7 billion and 3-year IMF program, approved in December 2018. But during this transition period, where the authorities, with the support of the IFIs, are trying to spur the private sector, restore macroeconomic stability with a more flexible exchange rate and sounder public finances, having cleared large amount of arrears and improved the debt structure, Angola&#8217;s credit metrics remain highly vulnerable to shocks.



The review period, which may extend beyond the usual three-month horizon, will allow Moody&#8217;s to assess the credibility and sustainability of the government&#8217;s plans and its ability to mitigate the impact of significantly lower oil prices on Angola&#8217;s credit standing.



ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS



Environmental considerations are not material for Angola&#8217;s rating.



As an oil producer and exporter, Angola&#8217;s environmental risks derive from carbon transition. Angola&#8217;s credit profile would face downward pressure in a scenario of rapid global transition to lower reliance on hydrocarbons that would depress global hydrocarbon demand and prices. However, in light of the measures against climate change taken so far, this is not Moody&#8217;s baseline.



Social considerations influence Angola&#8217;s credit profile, given very low wealth levels and high levels of poverty. GDP per capita, at $6,851 on a PPP basis as of 2018, remains low. Additionally, the UN&#8217;s Human Development Index for 2018 ranked Angola 147 out of 189 countries. Social indicators have improved from a very low level since the end of the civil war in 2002, but income inequalities remain very high despite the oil wealth of the country. Since the oil shock and the election of President Lourenco, the authorities have been implementing an ambitious reform agenda despite the political cost and inherent execution risks. Risk of social unrest remains, especially stemming from jobless young people.



Governance considerations are material to Angola&#8217;s credit profile and are a driver of this action. Data transparency and availability are areas of improvements, as well as institutional capacities that remain limited. For example, Angolan banks lost their dollar-correspondent banking relationships in 2016 because of their failure to meet international standards relating to shareholder structures and money laundering, resulting in increased transaction costs and delays. There are also significant weaknesses related to the management of public finance, illustrated by the level of arrears accumulated over the last few years.



FACTORS THAT WOULD LEAD TO A DOWNGRADE OF THE RATING



Moody&#8217;s would downgrade the rating if the review were to conclude that Angola&#8217;s government was unlikely to be able to alleviate the damage to its balance sheet and the subsequent rise in liquidity risk resulting in a credit profile no longer consistent with a B3 rating. Increasing risks of a balance-of-payment crisis would also likely lead to a downgrade.



WHAT COULD LEAD TO CONFIRMATION OF THE RATING AT THE CURRENT LEVEL



Moody&#8217;s would confirm the rating if the review were to conclude that a credible fiscal and economic policy response from the government will efficiently manage the risks arising from the upward trend in government debt, government liquidity risks, and increased pressure on the exchange rate, leaving Angola&#8217;s credit profile consistent with a B3 rating.



GDP per capita (PPP basis, US$): 6,851 (2018 Actual) (also known as Per Capita Income)



Real GDP growth (% change): -1.2% (2018 Actual) (also known as GDP Growth)



Inflation Rate (CPI, % change Dec/Dec): 18.6% (2018 Actual)



Gen. Gov. Financial Balance/GDP: 2.2% (2018 Actual) (also known as Fiscal Balance)



Current Account Balance/GDP: 7% (2018 Actual) (also known as External Balance)



External debt/GDP: 44.4% (2018 Actual)



Economic resiliency: b2



Default history: No default events (on bonds or loans) have been recorded since 1983.



On 26 March 2020, a rating committee was called to discuss the rating of Angola, Government of. The main points raised during the discussion were: The issuer&#8217;s economic fundamentals, including its economic strength, have materially decreased. The issuer&#8217;s fiscal or financial strength, including its debt profile, has materially decreased. The issuer&#8217;s susceptibility to event risks has not materially changed.



The principal methodology used in these ratings was Sovereign Ratings Methodology published in November 2019 and available at <a href="https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1158631">https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1158631</a> . Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.



The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.



The local market analyst for this rating is Aurelien Mali, +971 (423) 795-37.



REGULATORY DISCLOSURES



For further specification of Moody&#8217;s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody&#8217;s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx? docid=PBC_79004.



For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody&#8217;s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider&#8217;s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.



For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.



The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.



These ratings are solicited. Please refer to Moody&#8217;s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.



Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.



Moody&#8217;s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at <a href="https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569">https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569</a> .



At least one ESG consideration was material to the credit rating outcome announced and described above.



The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody&#8217;s affiliates outside the EU and is endorsed by Moody&#8217;s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody&#8217;s office that issued the credit rating is available on www.moodys.com.



Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody&#8217;s legal entity that has issued the rating.



Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.



Samar Maziad



Vice President &#8211; Senior Analyst



Sovereign Risk Group



Moody&#8217;s Investors Service, Inc.



250 Greenwich Street



New York, NY 10007



U.S.A.



JOURNALISTS: 1 212 553 0376



Client Service: 1 212 553 1653



Marie Diron



MD &#8211; Sovereign Risk



Sovereign Risk Group



JOURNALISTS: 852 3758 1350



Client Service: 852 3551 3077



Releasing Office:



Moody&#8217;s Investors Service, Inc.



250 Greenwich Street



New York, NY 10007



U.S.A.



JOURNALISTS: 1 212 553 0376



Client Service: 1 212 553 1653

Moody’s places Angola’s B3 ratings on review for downgrade

NKC African Economics expects the coronavirus-related knock to economic
growth in Africa’s three largest economies alone to shave off 1 ppt from the
continent’s GDP growth this year, from 3.8% to 2.8%. 



Preliminary estimates point towards the weakest continental growth
since the early 1990s.



The continent’s three largest economies, South Africa, Nigeria and
Egypt – together accounting for just under 60% of African GDP – will see a
significant weakening in economic growth this year. 



This slowdown in economic activity will permeate through the
continent as these countries are salient drivers behind economic growth in
their respective regions.&nbsp; 



In addition to the indirect effects stemming from weakness in the
largest economies, other African nations will also have to deal with a much
more volatile external economic environment. 



The collapse in tourism will weigh on economic growth in many
countries (particularly the island nations, Morocco, Egypt, and Tunisia), while
a reduction in both export demand and commodity prices will weaken fundamentals
in Africa’s more export-oriented economies (most notably the oil producing
nations).&nbsp; 



The escalation in the Covid-19 outbreak in Africa implies there is
a lot more at stake than foregone economic production. 



Most African countries will not be able to effectively implement
the severe restrictions on movement that we have seen globally. The
impracticality of implementing widespread self-quarantine in shantytowns or
informal settlements means that this will not be an option. Mismanagement of
the situation could lead to human costs far exceeding economic losses.



Tourism is a key forex generator and employment creator across the
continent. Severe travel restrictions, border closures and lockdowns in key
source markets will result in a collapse in tourism during the first half of
the year, at least. 



Domestic and intra-Africa tourism have been key drivers behind
growth in overall tourism in recent years, but as more Covid-19 cases are
confirmed on the continent we will see an increase in domestic travel
restrictions and regional border closures. 



The island nations will be hardest hit, but the mainland will feel
the effects in the North (particularly in Tunisia, Morocco and Egypt), South
(Namibia, Botswana), East (Tanzania, Rwanda, Kenya) and West (Côte d’Ivoire,
The Gambia, Cameroon). 



Low barriers to entry have led to tourism becoming a key source of
employment. The island nations in particular are dependent on tourism to
generate employment, most notably the Seychelles (where tourism accounts for
around 44% of formal employment), Cape Verde (39%) and Mauritius (19%). 



Tourism has also become a salient job creator on the African
mainland, and a slump in the sector could result in rapid job losses given the prevalence
of micro- and small-sized enterprises operating in the sector.&nbsp; 



The slowdown in global economic activity will translate into a
reduction in demand, while lower commodity prices will compound this negative
effect on exports. 



Africa’s energy exporters will struggle to come to terms with a
much more hostile external environment. Countries such as Nigeria, Angola and
Gabon are highly dependent on oil exports not only to generate forex but also
to fund government spending. 



Countries including Namibia, Zambia, Botswana and Mozambique are
dependent on mineral exports for the same reasons. 



Generally speaking, countries that have a GDP structure orientated
towards exports will feel the pain of a weaker external environment.



Lower international energy prices will have a detrimental impact
on the continent’s oil exporters, but many other countries stand to benefit. 



A reduction in the oil imports bill will have a favourable impact
on external balances while also containing consumer price inflation. Lower
inflation will support consumer spending at a time when a weak external
environment increases the importance of domestic consumption in driving overall
economic growth.&nbsp; 



The South African economy had already entered 2020 on a very
fragile footing before the dramatic external developments related to the
Covid-19 pandemic. NKC forecasts a 5% real GDP contraction this year. Domestic
policy uncertainty and supply-side constraints have now been accompanied by a
deterioration in global business sentiment and a drop in demand for South
African goods, all weighing on the country’s economic recovery prospects. 



In addition, the three-week long nationwide lockdown, which
commenced on March 27, will result in a collapse in consumer spending. The
outlook could deteriorate further if the lockdown is extended.&nbsp; 



The coronavirus has not as yet, as far as we know, taken
significant hold in Nigeria. However, the weaker external environment and more
specifically, the recent collapse in international oil prices, will have a
marked impact on the economy’s performance this year.



Lower oil prices will result in tighter FX liquidity, rising
inflation, falling investment, lower fiscal expenditure and easing consumption
growth. 



As a result, NKC has revised its growth projection sharply lower
to 1.2% this year, with risks still firmly stacked to the downside. 



A more severe domestic outbreak of Covid-19 would cause
significant disruption to daily economic activity, particularly when
considering the population density in the country’s biggest cities. 



Despite the Egyptian government’s efforts, the number of confirmed
Covid-19 cases continues to rise considerably. 



The president has urged all citizens to stay at home for a two-week
period and a night-time curfew has been declared, while the possibility of a
formal lockdown in some regions is also circulating in local media. 



The fiscal deficit is set to widen significantly over fiscal year
(FY) 2019/20 and FY 2020/21 following the announcement of a stimulus and
bail-out package to the value of approximately E£100bn. 



Government revenues already came in far below budget during the
first half of FY 2019/20 and will take a massive knock during the second half
of the fiscal year, which ends in June. 



Lower economic growth reflects weaker consumption, investment, and
exports. 



The recently announced fiscal stimulus measures, however, should
prevent a collapse in domestic demand. 



The economic impact of the coronavirus epidemic will be
considerable, but the human costs will be higher yet. 



As of end March South Africa remains the hardest-hit African
country from a confirmed-case perspective and the expected economic hardship
reflects this. 



However, South Africa is also arguably the best-placed country on
the continent to deal with the pandemic. While it does have a large
immuno-compromised population due to its struggles with HIV, the country might
be able to leverage its sophisticated private healthcare sector to supplement
inadequate public services. 



Most other African nations will not have this benefit. 



Confirmed Covid-19 cases will undoubtedly increase across the
continent in coming weeks, and timely and effective government responses will
be required to ensure that this does not become another African tragedy.



Jacques Nel – Head of Africa Macro



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

Clarification on COVID-19 “hotspots” as SA moves to level 3 lockdown

Op-Ed: African giants to stumble due to Covid-19 pandemic

Officials warn that although governments were trying to be
transparent and do the right thing, some slipped through the net.



By Chris Bishop



COVID-19 cases are occurring at the rate of 300-a-day in
sub-Saharan Africa and there are likely to be many more that the authorities
are missing, a World Health Organisation briefing on the continent admitted
Thursday. The good news is that experts are hard at work on creating a vaccine,
but this may take more than a year.



The WHO is working with governments across Africa to contain
the disease as it threatens to spread rapidly throughout the continent. Rwanda
and Angola have gone on lockdown in the last week and South Africa will follow
suit a midnight Thursday when businesses and shops – except those selling food
and medicine – will close across the country.&nbsp; 



The webinar briefing, moderated by the World Economic Forum
from Geneva, heard that a month ago just one country in Sub-Saharan Africa
reported an infection; just two weeks ago it was 10 and in the last three days
40 Sub-Saharan Africa countries said they had cases of COVID-19.&nbsp;&nbsp; 



“We have still a window, true it is narrowing every day, to
contain this disease. In half of the countries in Sub-Saharan Africa we still
have imported cases and we have identified that local spread is not
happening…We could contain this virus in many countries. What we are seeing is
draconian measures being put in place, like closing down places and stopping
flights, but these need to be following up by checking on people in quarantine
and making sure there is social distancing. We still have the opportunity to
stop it in some countries,” says Dr Matshidiso Moeti, the WHO Regional Director
for Africa, from her headquarters in Congo Brazzaville.&nbsp; 



South African born Moeti, a citizen of Botswana, said there
was strong political will to fight the outbreak with countries in Africa
ramping up their defences. When the first case was reported in Africa, she
said, only Senegal and South Africa had the laboratories to diagnose the
disease; now 40 countries had the wherewithal.



WHO officials also admitted, under questions from
journalists on the webinar, that small countries and island nations in
Sub-Saharan Africa were most at risk, along with countries suffering conflict
and population displacements, because their resources were thin. 



Officials also said that conditions in some parts of Africa
– where 50 or 60 people could be living the same property were not conducive to
the social distancing that is being seen as a main plank in the strategy to
fight the disease.



“I think this is something we will continue to think through
there is no easy answer to it. We have to think through the issue of our own
cultural leanings…This is something in which we have to work closely with our
community,” says Dr John Nkengasong, the director of the African Centres for
Disease Control for WHO.



Officials also admitted, when asked whether cases were being
underreported in Africa, that although governments were trying to be
transparent and do the right thing, some slipped through the net.



“There are cases out there that we don’t know,” admitted one
official.&nbsp;&nbsp;&nbsp; 



Scores of experts were working on a vaccine for COVID-19,
but it was likely to take a year to 18 months to perfect one for the market.



For now, quarantine and keep your distance.



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

International travel for South Africans is now allowed, this is how it will work

WHO: Sub-Saharan Africa reporting at least 300 COVID-19 cases a day

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Yesterday markets experienced a historic drop in shares that were last seen during the 2008 global financial crisis. The failure of Russia to agree on Saudi Arabia oil cuts led to a 30 per cent decline in oil markets but is on the path of recovery today, joining CNBC Africa to unpack what the oil price crash could mean for the oil rich nation of Angola is Rui Oliveira, CEO at BFA Asset Management.

Angola bears the brunt of oil market crash

Angola bears the brunt of oil market crash, Moody’s downgrade

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Moody’s has downgraded Angola’s sovereign rating to B negative with a stable outlook pricing in the impact of lower oil production and lower oil prices. Joining CNBC Africa for today’s Africa Exchange segment is Ridle Markus, Africa Strategist at Absa Corporate and Investment Banking.

Moody’s downgrades Angola’s ratings to B-minus

Moody’s downgrades Angola’s ratings to B-minus, outlook stable

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Angola is the second largest oil producer in sub-Saharan Africa and has achieved some economic and political strides in recent years, but could the recent scandals and high unemployment and poverty rates leave international investors doubtful? Joining CNBC Africa for more is Rui Oliveira, CEO at BFA Asset Management.

How the coronavirus

How the coronavirus, Luanda leaks impacts Angolan markets

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Sasol has been the latest company to join the list of others who are acquiring secondary listings on A2X exchange. Joining me for more on this is Kevin Brady the CEO of A2X exchange.

Absa on the main drivers for Africa’s best performing economies in 2020

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Joining CNBC Africa to discuss Angolan market updates in the oil rich country is Rui Oliveira, CEO at BFA Asset Management.

A look at how tensions are influencing oil hikes in Angolan markets

Angola eases open investment taps

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The Basketball Africa League (FIBA) announced cities in Egypt, Senegal, Nigeria, Angola, Morocco and Tunisia as the host and the host city for the first-ever BAL Final Four and BAL Final will be Kigali. Additionally, Nike and Jordan Brand will be the exclusive outfitter of the new professional league featuring 12 club teams from across Africa and scheduled to begin play in March 2020. Amadou Gallo Fall, Basketball Africa League President, joins CNBC Africa for more.

Angola

BFA Asset Management on Angola’s annual budget outlook

The African entrepreneur who made it by streaming sweet music to the locked down.

COVID-19: Angola begins partial reopening of economy

BFA Asset Management on Lusophone Africa’s COVID-19 response plan

Op-Ed: How Angola can use its industries to fight COVID-19

Where to invest in SSA amid the coronavirus crisis

Angola plans to strengthen lock-down restrictions as Covid-19 cases rise

Op-Ed: Why the COVID-19 pandemic is no time for fiscal distancing

Moody’s places Angola’s B3 ratings on review for downgrade

Op-Ed: African giants to stumble due to Covid-19 pandemic

WHO: Sub-Saharan Africa reporting at least 300 COVID-19 cases a day

Angola bears the brunt of oil market crash, Moody’s downgrade

Moody’s downgrades Angola’s ratings to B-minus, outlook stable

How the coronavirus, Luanda leaks impacts Angolan markets

Absa on the main drivers for Africa’s best performing economies in 2020

Angola eases open investment taps

BAL President Amadou Gallo Fall on how sport is driving economics on the continent

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Angola

BFA Asset Management on Angola’s annual budget outlook

The African entrepreneur who made it by streaming sweet music to the locked down.

COVID-19: Angola begins partial reopening of economy

BFA Asset Management on Lusophone Africa’s COVID-19 response plan

Op-Ed: How Angola can use its industries to fight COVID-19

Where to invest in SSA amid the coronavirus crisis

Angola plans to strengthen lock-down restrictions as Covid-19 cases rise

Op-Ed: Why the COVID-19 pandemic is no time for fiscal distancing

Moody’s places Angola’s B3 ratings on review for downgrade

Op-Ed: African giants to stumble due to Covid-19 pandemic

WHO: Sub-Saharan Africa reporting at least 300 COVID-19 cases a day

Angola bears the brunt of oil market crash, Moody’s downgrade

Moody’s downgrades Angola’s ratings to B-minus, outlook stable

How the coronavirus, Luanda leaks impacts Angolan markets

Absa on the main drivers for Africa’s best performing economies in 2020

Angola eases open investment taps

BAL President Amadou Gallo Fall on how sport is driving economics on the continent

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Advertise With Us

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