Angola approved a new Regulation on the Proceedings and Criteria for the Payment and Regularization of Late Debts

This Regulation is a strong effort from the Angolan Government to comply with its immediate purposes regarding the sustainability of public debt and finances, which demand a clear strategy for the regularization of late debts, and the definition of greater strictness and budgetary discipline.

The most relevant rules are the following:

• Debts that occurred before 2019 shall be presented by all the direct and indirect state administration unities, with the homologation of the supreme body of each sector, to the Public Finances Ministerial Department, in 45 days from September 22. Debts from 2019 and subsequent years will be submitted according to the new Regulation proceeding;

• From January 3, 2022, debts whose execution is not performed under State Financial Management Integrated System, will not be legally considered;

• Late debts legally considered are only the debts incurred through public procurement proceeding, however, contracting that has not followed that proceeding may be considered in a case by case analysis and according to some principles;

• Debts that have not arisen from public procurement rules may be regularized if the object of the contract was an undelayable public interest, it was foreseen in the National Development Program, the contract has been fully executed, and the value has been defined according to the market price;

• In general, public companies and late debts that already have a regularization agreement, are not covered by these norms;

• The payment of the regularized late debts depends on the validation by the General Inspector of State Administration and successive inclusion on the State Financial Programming, according to the indebtedness limits and the treasury availability in each economic year;

• Each budgetary unit shall compile and organize the information regarding the debts with the mandatory documents, and then send it to the Ministerial Department responsible for the Public Finances, that will transmit to the State Administration General Inspection the debts that were not made under the State Financial Management Integrated System, and the General Inspection will analyze such debts and validate them or not;

• The preferred form of payment will be the tax compensation, in which the credits over the State will be paid through compensation by tax credits over the companies;

• In the regularization proceeding, the older debts will have a preference in the payment. Also, minor debts will have a preference when compared to debts of bigger amounts;

• Creditors may transmit their credits to other entities, if are authorized by the debtor and their compliance with tax obligations is assured,

• The state of each approval/validation proceeding will be available on the internet, through the Suppliers Portal.

With these new rules, Angola demonstrates its concern regarding the necessity of ending the tradition of non-quoted expenses and non-compliance with the applicable legislation. The approval of clear, transparent, and objective norms which establish the proceeding of regularization of State debts will benefit the suppliers of goods, services, and public works, permitting to eliminate one of the structural problems in the Angolan economy, which is the traditional delay of the Angolan State to pay its debts, what severely affects the State suppliers and their economic chain.

Also read: Angola and Portugal reviewed their Investment Protection and Promotion Agreement

Article by Duarte Marques da Cruz

Duarte Marques da Cruz
Duarte Marques da Cruz is partner of the Portuguese law firm MC&A, specialised in international business advisory, with a special focus in Lusophone markets. With extensive experience in the Energy sector (Renewables and Oil & Gas) and in International Taxation, he has supported international companies in major upstream, midstream transactions and projects, including in implementing, exploration and development programs. Duarte has also supported international clients in other areas of practice, namely, Mining, Transport & Logistics, Regulatory Compliance and Mergers & Acquisitions in Mozambique, Angola and Portugal.
Through this Simplification Project, Angola shows to investors and economic players that intends to maintain its bet on the internal and external investment; on other hand, it is important to note that this simplification procedure is only at its beginning and is expected a wider range of facilitation in multiple public administration proceedings and regarding more sectors of the economy.