Despite now being below the weighted average recorded in 2022, at 12.5%, the interest Angola pays on its financing remains high and continues to weigh heavily on debt servicing. This is one of the objectives the Government failed to meet under the National Debt Strategy 2024–2026.
The weighted average interest rate on Angola’s public debt increased by 0.2 percentage points to 8.4% in the third quarter of last year compared to 2024, making it one of the two targets the Government did not achieve under the Medium-Term Debt Strategy 2024–2026. This remains a high average interest rate by international standards and represents a significant risk from the perspective of investors in sovereign debt.
Even so, the current weighted average rate is below the 12.51% recorded in 2022. The other target that remains off track is the reduction in the proportion of debt maturing within one year. “The international context of high interest rates and persistent treasury-related challenges has constrained the achievement of the objective of reducing the weighted average interest rate to levels between 7% and 7.8%, as well as reducing the percentage of debt maturing within one year, which stood at 20.5% in 2025,” compared to 14.1% at the end of 2021, according to the Medium-Term Debt Strategy 2026–2028.
The document was presented last Tuesday during an initiative by the Debt Management Unit (UGD) of the Ministry of Finance. Of the ten indicators set as targets for the 2024–2026 period, five are within the target range, namely the debt-to-GDP ratio, which stood at 48.7% at the end of the third quarter (down from 69% in 2020), the average maturity of government debt—around eight years—and the percentage of domestic debt with fixed interest rates, which reached 97.9% in September.
The objective of reducing the proportion of external debt with variable interest rates was also achieved, although it remains high at around 69.8%. This means that any external event contributing to higher sovereign debt interest rates (as occurred last year) worsens the already high budget deficit (2026 State Budget: Kz 3.8 trillion). Also within the targets is the prioritization of concessional financing, which increased from 22% in 2024 to 24% by the end of the third quarter. The remaining three objectives are still in progress.
Experts have praised the Government’s debt reprofiling strategy, particularly the extension of debt maturities by swapping short-term debt for long-term instruments. However, this objective has sometimes been undermined by financing needs, especially at the end of each year, as was the case in 2024, when a USD 1 billion loan was contracted at an interest rate close to 10% with a one-year maturity (later rolled over to three years).
Still within the debt strategy, priority has been given to reducing oil-collateralized debt. Debts owed to Brazilian and Israeli creditors have already been fully repaid, contributing to lower vulnerability of the debt portfolio to external shocks, particularly fluctuations in the oil market, according to an official document.
As a result, China is no longer the country’s largest creditor, a position now held by domestic creditors (banks and private investors in debt securities) and Eurobond investors. Angola’s oil-collateralized debt to China now stands at “only” around USD 8.5 billion, compared to approximately USD 16.2 billion in 2020.
Source: Expansão
