Ratings picture is mixed following fall in oil revenues, fiscal pressure

It said: “We expect Angola’s economy to slow as a result of a sharp fall in government expenditure, a shortage of dollar liquidity and uncertainty about the future direction of oil prices constrains activity in the non-oil economy. Fitch expects growth to moderate to 3.3% in 2015, from 4.4% in in 2014 and 6.8% in 2013. “The 45% drop in oil prices since July 2014, which once again highlighted Angola’s vulnerability to oil price shocks, is expected to result in a sharp drain on reserves, weaker economic growth and rising debt. Nonetheless, the Angolan authorities have responded quickly to sharply lower oil prices by severely cutting expenditure and allowing the exchange rate to depreciate, in sharp contrast to the delayed policy response in 2008, the last time oil prices collapsed.” Meanwhile, Fitch has affirmed Ghana at ‘B’, with negative outlooks. It reported: “The IMF board is expected to approve Ghana’s US$940m extended credit facility in April, which should provide some easing of severe external and fiscal financing pressures. However, Ghana’s track record of increasing spending ahead of elections raises concerns about the government’s ability and willingness to meet the ambitious fiscal consolidation targets set by the IMF.hideFor Zambia, Standard & Poor’s (S&P) has affirmed its ‘B+/B’ Ratings although the outlook remains negative on fiscal and external risks. S&P said “We continue to believe that Zambia’s institutional strengths and solid growth prospects remain sufficient to offset increasing short-term fiscal and external challenges. “However, we consider that policy-making could be constrained by political considerations, pre-venting the final resolution of key fiscal uncertainties, which could add to copper-price led currency depreciation and external pressure.” Meanwhile, S&P affirmed ratings for Congo at ‘B/B’ with a stable outlook. It explained “The ratings on the Republic of Congo are constrained by low institutional effectiveness and income levels, presidential succession risk, high fiscal, external and economic dependence on oil, and limited monetary flexibility.” Fitch has also affirmed Congo’s rating, at ‘B+’ with a stable outlook, reflecting Congo’s strong balance sheet and positive growth outlook. Finally, Fitch has revised Tunisia’s outlooks to stable from negative. Its Long-term foreign and local currency Issuer Default Ratings (IDRs) have been affirmed at ‘BB-’ and ‘BB’ respectively. The issue ratings on Tunisia’s senior unsecured foreign currency bonds are also affirmed at ‘BB-’. It explained: “The smooth legislative and presidential elections in late 2014 enabled the formation of a new, democratically-elected coalition government in early 2015, which benefits from a large majority (more than 70%) in a parliament elected for five years. “This puts an end to a four-year political transition process and lays the ground for better political stability in the country. Political and economic destabilisation risk from social unrest or terrorist attacks remains significant, however, as illustrated by the recent attack in Tunis.”

Ratings picture is mixed following fall in oil revenues, fiscal pressure

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