Angola looks to local markets as debt expenses consume over half of its 2026 budget
Angola intends to pay off nearly half of its 2026 budget, highlighting the way that growing debt servicing costs are reducing fiscal space throughout Africa and pushing governments to depend increasingly on domestic markets for finance.
32.9% of overall spending, or 10.9 trillion kwanzas ($11.95 billion), will go toward loan repayments, according to the finance ministry’s draft budget, which was made public on Friday. The remaining 13%, or 4.3 trillion kwanzas, will go toward interest payments.
About 45.9% of total spending will go toward debt service.
In 2026, Angola expects to borrow 7.1 trillion kwanzas from domestic sources instead of 1.7 trillion from external creditors. This is in line with a tendency in frontier markets to rely increasingly on domestic financing because access to foreign currency is frequently more costly and hazardous.
Compared to 2025, when it was projected to be 3.3% of GDP, Luanda’s budget deficit is already 2.8%.
In an effort to control expenses brought on by fluctuating oil prices, the second-largest producer of crude oil in Sub-Saharan Africa said that it would reduce overall spending by 4.7% to 33 trillion kwanzas. The crude oil price of $61 per barrel is assumed in its draft budget, but on Friday, Brent crude futures were trading close to $65 per barrel.
Economic growth is predicted to increase from 3% in 2025 to 4.2% in 2026.
In addition, the government expressed alarm over the dramatic increase in tax breaks and incentives, known as “fiscal waivers,” which rose from 184 billion kwanzas in 2018 to around 3 trillion kwanzas in 2024. The exemptions, which are mostly given to non-oil industries, are being examined for how they affect Angola’s economic stability and revenue.
