Angola takes advantage of higher oil prices to accelerate $18bn debt repayment plan to China

Angola takes advantage of higher oil prices to accelerate $18bn debt repayment plan to China
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By Elena Kachkova in Johannesburg October 19, 2022

Angola is taking advantage of higher oil prices to accelerate its debt-reduction plans with faster repayments to China, its largest creditor. Africa’s second-largest crude producer owes China $18bn, about 40% of its total external debt, after settling loans totalling $1.32bn this year.

A stronger economy and the government’s prudent policies have allowed the southern African republic to regain its financial footing, with the kwanza strengthening by 21% against the US dollar this year, Macao News reported on October 18. 

Repayments will be stepped up next year, said Finance Minister Vera Daves de Sousa, according to whom Angola’s debt as a proportion of the gross domestic product (GDP) is projected to fall to about 61% in 2023, down from 66% this year and more than 100% in 2020.

De Sousa attributed the improvement in the metric to a rebound in the economy, the nation’s strengthening currency and the government’s conservative approach towards taking on new loans and determination to reduce interest costs, Macao News writes.

President Joao Lourenco reappointed De Sousa to her post after winning re-election in an August 24 vote. He has pledged to focus on creating jobs for youths and improving living standards for all during his second term, Bloomberg reports.

The government said it aims to free up money by diversifying its sources of funding and further reducing its borrowing costs, although its options are limited in the current global environment.

De Sousa told Bloomberg that the country will be very careful about stepping into the market.

“We will look more at the concessional and semi-concessional financing, selling local bonds to international investors, tapping structured commercial loans from export credit agencies and entering into partnerships with private investors and multilateral finance institutions to build new infrastructure,” De Sousa said.