Debt payment of Angola, Mozambique and Cape Verde in 2023 is worth 25% of foreign reserves

By Mario Baptista

The financial rating agency Fitch Ratings warned today that there are eight countries in sub-Saharan Africa with public debt payments in 2023 that represent a quarter of foreign reserves, including Angola, Mozambique and Cape Verde.

“For the eight countries that reported reserves individually over the last six months, four (Angola, Republic of Congo, Ethiopia, Kenya and Mozambique) face external debt service payments in 2023 equivalent to more than a quarter of their reported reserves, with Cape Verde having to pay the equivalent of 23% of external reserves”, says Fitch Ratings.

According to an analysis of the public debt in the 18 sub-Saharan African countries covered by this financial rating agency owned by the same owners of the consultancy Fitch Solutions, Angola leads the volume of debt payments until 2025, always having to pay more than US$6 billion annually, around €5.6 billion, by 2025.

The report, sent to investors and to which Lusa had access, specifies that Angola, at the end of this year, will have paid US$6.48 billion, which will be added to next year’s US$6.7 billion, US$6.4 billion in 2024 and US$7.3 billion in 2025.

“World Bank data show that aggregate debt payments in sub-Saharan Africa in 2025 will rise by around 7% to US$26.8 billion, with payments at maturity relatively high in Angola, Côte d’Ivoire, Gabon, Ghana, Kenya, Namibia and Nigeria”, write the analysts.

At regional level, payments will reach US$22.3 billion, almost €21 billion, an increase of around 4% compared to the US$21.4 billion (€20.1 billion) that will be paid by the end of this year.

Access to international markets has been hampered by the rise in interest rates by central banks, which automatically makes it more expensive the issuance of sovereign debt securities, but also dollar coupon payments, as there has been a widespread depreciation of African currencies following rising inflation.

“Access to international markets could improve between 2023 and 2025 if global interest rates retreat from the cyclical peak or if international investor sentiment improves, facilitating refinancing”, write Fitch Ratings analysts, warning that “if the environment remains challenging, meeting debt payments through drawdowns of foreign currency reserves could increase rating pressures in many countries.

With information from Lusa/MSN

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