Moody's issued a stark warning over Angola "going it alone" today, after the fragile five Opec member halted funding talks with the International Monetary Fund.
Angola suspended talks over a three-year loan which would've supported its foreign exchange reserves and the government's difficult fiscal adjustments. Longer-term, the cash could've helped it reduce its reliance on oil.
"By ending the talks for an extended fund facility, Angola will essentially go it alone in managing downside pressures on its balance sheet and external accounts," Rita Babihuga, assistant vice president at Moody's, wrote in a note.
The African state's debt-to-GDP ratio doubled over the past two years, and the credit ratings agency expects it to exceed 50 per cent this year. It added that recent fiscal reforms were at risk from political pressures ahead of the 2017 general election, especially without the IMF programme.
Moreover, while a recent bounce in oil prices helped it make more money from oil, import demand is still problematic. Moody's said this supports its current account forecast of a decline of 6.8 per cent of GDP in 2016.
Angola recently tapped up the World Bank for a new loan to help it weather low oil prices.