LONDON / JOHANNESBURG (Reuters) – Angola will receive $ 6.2 billion in debt relief over the next three years through deals with three of its major creditors, the International Monetary Fund (IMF) said in a report released on Monday.
Angola said on Friday it was close to entering into debt deals with a number of Chinese banks and government agencies.
The African oil exporter has retreated under a growing debt burden following a sharp drop in crude prices and amid the economic fallout from the coronavirus pandemic.
“Although the debt is sustainable, significant vulnerabilities remain,” the IMF said in its report. “Debt dynamics are very sensitive to new volatility in oil prices.”
In a letter included in the report, the Angolan government, which has previously sought relief from official bilateral creditors as part of an initiative backed by the wealthy Group of 20 (G20) economies, acknowledged its precarious position.
“To the extent that unforeseen risks to achieving the medium-term debt target materialize, we will act to mitigate those risks, including by seeking additional debt relief from a broader group of creditors,” he said. -he declares.
Private sector involvement in debt relief has become a hotly debated issue ahead of the G20 decision on whether to extend debt payment holidays beyond 2020.
While the World Bank has pushed private creditors to shoulder some of the burden of debt relief, investors as well as some governments have argued that it will jeopardize their access to international capital markets.
Asked on Friday about the prospect of compulsory involvement of private creditors, Angolan Secretary of State for Budget and Investment Aia-Eza Silva told Reuters: “Our main focus now is to deal with major creditors , our big (bilateral) creditors, and that’s where we put our emphasis now. “Meanwhile, a 5% drop in oil prices has added to the pressure on Angola’s dollar bonds XS1318576086 = TE, which fell more than 4 cents on the dollar to trade at just over 86 cents, its lowest level since mid-July, according to Tradeweb data.
Angola owes more than $ 20 billion to a number of Chinese entities, including $ 14.5 billion to the Development Bank of China (CDB) [CHDB.UL], and nearly $ 5 billion to the Export-Import Bank of China (EximBank) 2544.HK. He also borrowed from China’s largest lender, ICBC.
While the IMF declined to name the creditors involved in the debt reprofiling deals, two private analysts following the negotiations said two of them were CBD and Eximbank.
Luanda struck a deal with one of its biggest creditors, identified by analysts as the CBD, in June, the IMF said. The agreement grants a three-year deferral of principal repayment on three loans, with the largest to be repaid over seven years thereafter.
A deal with a second major creditor, identified by analysts as EximBank, is being worked out with a similar reshaping of principal payments, the IMF said in the report.
“The authorities have obtained concrete and credible assurances of financing from these creditors,” he said.
Meanwhile, discussions with a third creditor were ongoing, according to the report.
The IMF has estimated that Angola’s debt-to-GDP ratio will decline steadily, from just over 120 percent forecast by year-end to 37.8 percent by the end of 2030.
Reporting by Karin Strohecker in London and Joe Bavier in Johannesburg; Edited by Tommy Wilkes and Hugh Lawson