The Government is “swapping” external debt for domestic debt. The increase in the public debt stock is driven by a surge in domestic borrowing, which jumped by nearly USD 4 billion compared with December, while external debt fell by USD 693 million.
Angola’s public debt stock rose from USD 62.609 billion in December 2024 to USD 65.873 billion at the end of September this year, representing a 5% increase—equivalent to USD 3.264 billion in just nine months—according to Expansão’s calculations based on budget execution reports.
This growth is due to the rise in domestic borrowing, which surged by almost USD 4 billion compared with December, in contrast to the USD 693 million decrease in external public debt over the same period. It should be noted that these figures do not yet include the USD 1.75 billion Eurobond issuance, as that operation took place in the fourth quarter.
According to the third-quarter budget execution report published on the Ministry of Finance website, domestic borrowing increased mainly due to USD 1.602 billion in loans from the National Bank of Angola (BNA) to the Government, as well as a USD 2.073 billion rise in the stock of Treasury Bonds in national currency. These are medium- and long-term securities which, according to BNA’s money market data, were issued with three-year maturities at rates between 16.30% and 14%.
Four-year Treasury Bonds were issued at interest rates between 16.73% and 16.75%, while five-year bonds were issued at 17.25%, the same rate applied to six-year maturities. The rise in domestic debt stems mainly from the Government’s strategy of reducing reliance on external creditors to ensure greater debt sustainability—particularly as oil production is declining and oil-related fiscal revenues are also falling. This approach is further reinforced by the fact that international market interest rates remain excessively high and unsustainable, and access to external financing is increasingly difficult.
For economist and manager Álvaro Mendonça, the growth of domestic debt—mostly payable in kwanzas rather than foreign currency—would be positive if the external debt stock were decreasing at a faster pace. “It would mean swapping obligations payable in foreign currency for debt to be amortised in kwanzas. A good option, despite the interest rate differential. But that is not what is happening, as the external debt stock dropped only 1.5% over a year [1.4% over the past nine months], which does not offset the 5% increase in domestic debt,” he emphasised.
Today, the State’s debt securities are no longer held solely by the banking sector, as Angola now has distribution companies that then transfer them to private investors. Even so, a significant share of these securities remains with the banks, contributing substantially to the strong profits the banking sector has been reporting year after year. However, this heavy exposure to government debt carries risks, as it increases systemic vulnerability—a warning repeatedly highlighted in several International Monetary Fund (IMF) reports.
“A rigorous monitoring of systemic risks is necessary. Banks’ exposure to public debt requires particular attention, alongside policies aimed at expanding and diversifying the financial sector’s assets and investor base,” wrote IMF staff in the report published in June this year, referring to the post-programme assessment conducted annually on Angola.
Source: Expansão
