Angola Targets 51% Debt Anchor to Buffer Oil-Dependent Economy

The current legal framework, established in 2020, set a debt ceiling of 60 percent of GDP. However, heavy reliance on foreign-currency-denominated debt—which constitutes roughly 75 percent of the total—leaves the economy dangerously exposed to kwanza depreciation. Zviad Zedginidze of the IMF’s African Department argues that the 9 percent gap between the current ceiling and the proposed 51 percent anchor provides a vital safety buffer against the external shocks that have historically pushed the country toward fiscal instability.

Achieving this target demands a decade of sustained fiscal discipline, specifically maintaining a primary surplus of approximately 2.4 percent of GDP. Yet, this path presents a structural dilemma: the government must curb debt without cannibalizing the very investments needed to diversify away from petroleum. Relying on a non-oil primary deficit limit of 5 percent of GDP remains mathematically consistent with debt sustainability, provided that non-oil revenue collection improves and fuel subsidies are phased out. Without these adjustments, the risk of a development squeeze remains high, as excessive spending cuts could stifle the infrastructure and human capital growth required to break the oil dependency loop.