The International Monetary Fund has again cut its forecast for Angola’s economic growth, projecting a 2.1% expansion in 2025 compared to the earlier estimate of 2.4%, citing weaker oil exports.
The Fund, in a statement on Friday, warned that risks surrounding the Southern African nation’s ability to meet its debt obligations have increased since last year.
According to the IMF, Angola must limit its borrowing requirements, reduce expenditures, and embrace greater flexibility in its foreign exchange regime.
The warning followed an IMF board review of a staff mission to Luanda in May, when the Fund had already downgraded Angola’s growth outlook for this year from 3%, according to Reuters.
“Angola has been hit by volatility in oil prices and sovereign spreads, and weaknesses in oil production in the first half of 2025, amplifying the impact of those shocks,” the IMF noted.
Like several other small, open African economies, Angola, heavily reliant on oil, has been under pressure this year as U.S. trade tariffs unsettled global financial markets.
While the IMF still considers Angola’s capacity to repay debt “adequate,” it cautioned that risks to that assessment have risen.
It specifically warned against two financing paths that could prove unsustainable, relying excessively on domestic borrowing and taking on costly short-term external debt.
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“Excessive reliance on domestic financing risks further increasing banks’ sovereign exposure,” the IMF said.
Short-term measures, it added, could lead to “accumulating onerous debt service, potentially undermining investor confidence, and ultimately delaying market access on more favorable terms.”
In April, Angola was forced to provide an additional $200 million in security to JPMorgan after the price of a bond pledged as collateral for a loan fell alongside other frontier market assets.
The government later recovered the funds when the bond price rebounded.
The IMF’s May mission to Luanda was conducted under a Post Financing Assessment, a mechanism used for countries with credit outstanding above their IMF quota but without a formal program in place.
After the visit, the Fund highlighted Angola’s exposure to risks from lower crude oil prices and tighter external financing conditions.
The Angolan government is also working to reduce its portfolio of oil-backed loans from China in order to ease financial pressures.
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Image Credit: Reuters
