The Angolan government plans to spend 16.21 trillion kwanzas on public debt service in 2027, which is equivalent to 43.4% of the country's total expenditure of 37.34 trillion kwanzas, as outlined in the proposed 2027 General State Budget (OGE). This represents a 6% increase from the 15.24 trillion kwanzas allocated for this purpose in the 2026 OGE. The increase in debt service costs is notable, but the proportion of total expenditure dedicated to debt service is expected to decrease from 46% in 2026 to 43.4% in 2027.
According to the OGE 2027 Foundation Report, 7.49 trillion kwanzas will be used to pay interest on the debt, while 8.72 trillion kwanzas will be allocated to amortizing medium- and long-term debt. Interest payments will account for 20.1% of total expenditure and 4.56% of the country's Gross Domestic Product (GDP). The interest payment allocation of 7.49 trillion kwanzas exceeds the 5.74 trillion kwanzas budgeted for public employee salaries, including civil, military, and paramilitary personnel.
A breakdown of the interest payments shows that 4.31 trillion kwanzas will be allocated to external debt and 3.18 trillion kwanzas to internal debt. In contrast, the government plans to spend 8.72 trillion kwanzas on amortizing medium- and long-term debt, representing a 20.2% decrease from the 10.92 trillion kwanzas allocated in the 2026 budget. Of this amount, 5.97 trillion kwanzas will be dedicated to external debt and 2.74 trillion kwanzas to internal debt.
To ensure payment of debt amortizations and finance the budget deficit, estimated at 6.74 trillion kwanzas or 4.11% of GDP, the government requires 15.48 trillion kwanzas in gross financing for 2027. The government aims to mobilize 9.24 trillion kwanzas from the external market and 6.24 trillion kwanzas from the domestic market to cover these financing needs.
Despite the significant allocation to debt service, the government projects a reduction in the public debt ratio from 47.84% of GDP in 2026 to 46.7% in 2027, keeping it below the 60% legal limit set by the Public Finance Sustainability Law. This development indicates a cautious approach to managing the country's debt.
A comparison of debt service costs with public employee salaries reveals that interest payments exceed salaries by approximately 1.26 trillion kwanzas, even when considering employer contributions that increase personnel costs to 6.23 trillion kwanzas. This highlights the substantial burden of debt service on the country's finances.
The Angolan government's budget plans for 2027 reflect a balancing act between servicing the country's debt and managing public finances. With a focus on reducing the debt ratio and maintaining fiscal sustainability, the government faces the challenge of allocating resources effectively across various sectors while meeting its debt obligations.
Key points
- The Angolan government plans to allocate 16.21 trillion kwanzas to public debt service in 2027.
- Interest payments on the debt will account for 20.1% of total expenditure and 4.56% of GDP.
- The government aims to reduce the public debt ratio to 46.7% of GDP in 2027, below the 60% legal limit.
