• Angola plans to introduce a debt-for-health swap mechanism in 2026 to reduce debt costs and fund healthcare.
• The government targets about $1.7 billion in international market borrowing and $500 million in World Bank budget support.
• Debt service exceeded 40% of budget spending in 2025, while authorities expect the debt-to-GDP ratio to fall to 45% by end-2026.

Angola examines new options to ease the burden of public debt. The Ministry of Finance announced on Tuesday, January 27, its intention to implement a debt-for-health swap mechanism this year. The plan coincides with a return to international markets and financial support from the World Bank.

This mechanism allows a country to convert part of its debt into targeted investments in social sectors, specifically healthcare. Authorities plan to redirect savings from debt servicing toward health programs. However, the government has not yet disclosed the amounts involved or the creditors concerned.

Debt swaps with social or environmental objectives gain traction across developing economies. Tighter global financial conditions drive this trend. Several countries in Latin America and Africa, including Côte d’Ivoire last year, recently adopted similar instruments to ease fiscal constraints.

Expected return to international markets

Under its annual borrowing plan, Angola also plans to raise about $1.7 billion on international markets in 2026. At the same time, the government expects $500 million in budget support from the World Bank to help stabilize public finances.

The Ministry of Finance said Angola expects nearly $1.4 billion in commercial financing this year. The ministry said debt-for-health operations should account for part of this amount. Bilateral creditors and export credit agencies will cover the remaining financing needs.

Cutting debt costs

Authorities said they now seek to “minimize long-term financing costs” after years of heavy debt accumulation. The government relied heavily on oil-backed loans during that period. In 2025, debt service accounted for more than 40% of total budget expenditure.

The ministry expects the debt-to-GDP ratio to decline to 45% by the end of 2026, compared with 47% last year. The ministry linked part of the improvement to a revision of the GDP base year.

The International Monetary Fund expects moderate economic growth for Angola this year, at around 2%. The Bretton Woods institution stressed that Angola’s fiscal trajectory will depend on its ability to diversify an economy that remains heavily reliant on oil.

The Luanda government said it continues reforms. These reforms include a gradual reduction of subsidies and the opening of state-dominated sectors to private investment. Authorities aim to strengthen public finances on a sustainable basis.

Fiacre E. Kakpo