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Today, the Angolan Finance Minister announced that the agreement reached with Chinese institutions, Angola’s largest creditors, has a duration of 12 months and is renewable, allowing for faster debt repayment.
Speaking to Lusa on the sidelines of the 3rd edition of the Angola Economic Outlook, Minister Vera Daves indicated that the preliminary agreement provides for renewal every 12 months, enabling the Angolan Treasury to reduce the escrow account reserve and thus have between $150 million to $200 million (approximately €182 million) per month from this account until the end of the financing maturity.
This account refers to financial resources that are deposited in the creditor bank to ensure Angola’s compliance with its commitments to China. According to Vera Daves, Angola will also be able to pay off the debt more quickly as whenever the price of a barrel of oil is above $60, the Angolan state can make additional payments.
The agreement with the China Development Bank was negotiated in March, and the Minister of State and Economic Coordination noted at the time that the effects of this relief would be felt from April onwards.
Today, José de Lima Massano confirmed that the effects of the agreement with the Chinese creditors on the public accounts are already noticeable.
“We were expecting an influx of $200 million, and we received three times that amount, allowing us to meet our obligations with our own funds in managing the public debt,” the official told journalists.
He added, “This did not put pressure on the domestic and foreign markets to meet these responsibilities, and this leads to the release of more resources from the economy to support the private sector.”
However, Lima Massano noted that although the signs of economic relief are visible, the impact on people’s lives “does not happen overnight.”
The People’s Republic of China is Angola’s main creditor, holding $17 billion (approximately €15.62 billion), which represents about 27.41% of the government debt stock, which is $62 billion.
During this year’s visit of the Angolan President, João Lourenço, to Beijing, Luanda managed to negotiate agreements with Chinese creditor institutions to flexibilize the model of guarantee formation based on oil supply, relating to $10 billion (about €9.2 billion) contracted with the China Development Bank.
With the agreement, the volume of the escrow account reserve is reduced, which is constituted by the surplus between the oil supply and the value needed for servicing this debt, while the repayment schedule remains unchanged, the Angolan Treasury explained at the time.
New rules will apply for the Chinese side’s release of the escrow account balances, allowing the Angolan Treasury to dispose of an additional $150 million to $200 million monthly.
The Angola Economic Outlook 2024, organized by the Economia e Mercado magazine, is dedicated to the theme “Food Security: Reality, Challenges, and Opportunities” in this edition.
