Angola has secured three years of payment relief from Chinese creditors and expects to get more than US$700M in its next tranche of International Monetary Fund financing in the coming days, its finance minister said yesterday.
Africa’s second-largest oil exporter has been seeking payment relief as it strives to overcome the hit from the coronavirus pandemic, heavy debt service requirements and volatility in the oil sector.
Angola owes more than US$20B to a number of Chinese entities, including US$14.5B to the China Development Bank and nearly US$5B to the Export-Import Bank of China. It has also borrowed from China’s largest lender, ICBC, according to analysts’ calculations.
“We’ve got three years of breathing space and we will take the best advantage of that,” Vera Daves de Sousa said in an interview for the Reuters Next conference.
Angola had been transparent with the IMF on its negotiations with the Chinese, she said.
The IMF’s executive board will meet on Monday to decide on the latest review of Angola’s programme with the Fund. Angola has so far received about US$2.5B from the IMF as part of its largest funding programme in sub-Saharan Africa.
“We are expecting more than US$700M,” Daves de Sousa said. It forms part of a US$3.7B programme under the IMF’s Extended Fund Facility approved in December 2018.
In the future, she said Angola wanted to continue its relationship with China and all its “partners”, but with a priority on attracting foreign direct investment.
“We want to do more with China and all our partners but to see some money coming in and staying to create value, create jobs. What we are intending to do is shift a little bit, rebuild our relationship with our partners,” said Daves de Sousa.
The country is also part of the G20 group’s Debt Service Suspension Initiative (DSSI), which since April has helped 46 countries defer US$5.7B in 2020 debt-service payments.
That initiative was recently extended until the end of June.
“Of course, we need to do more,” Daves de Sousa said. “The countries need to do their own homework to look at the debt stock and how to optimise it, reprofile it and attract fresh capital.”
Angola has also been seeking to recover state funds lost because of corruption.
Scrutiny has increased since the authorities seized the domestic assets of Isabel dos Santos, daughter of former President Jose Eduardo dos Santos, accusing the billionaire and her husband of steering payments of more than US$1B from state oil company Sonangol and official diamond trading group Sodiam to companies in which they held stakes. Dos Santos has repeatedly denied wrongdoing.
The proceeds from the anti-corruption drive would be channelled into the central bank, Daves de Sousa said.
Central bank reserves have been under pressure because of the pandemic’s impact and oil price volatility.
“That’s a tricky question as the oil sector is 30% of GDP, 60% of fiscal revenues, 90% of exports,” she said when asked about the outlook for foreign exchange reserves.
“We are working to change that but the key indicator is still coming from the oil sector.”