On Tuesday, June 2, 2020, the Angola Finance Ministry stated that the country has asked for G20 debt relief and is in advanced stages of talks with some countries importing its oil on adjusting financing facilities. The ministry, however, stated that it expects no further debt overhaul to be needed beyond this.
“In consultation with the IMF, the Ministry of Finance has decided to avail itself of the G20/DSSI facility and applied to its sovereign peers to negotiate debt service standstill on official, Government to Government direct lending,” reads a statement by the Angolan Finance Ministry. Also adding that negotiations with oil importers on reprofiling are at “advanced stages” while talks are expected to conclude soon.
According to a report from the African Development Bank (AFDB) the oil price shock of 2014 reduced oil revenues from 35.3 percent of GDP to 17.5 percent in 2017, leaving an estimated fiscal deficit of 0.1 percent of GDP in 2019.
In 2019, low exports earnings from the oil sector saw the country’s current account surplus narrow from 6.9 percent of GDP in 2018 to 0.5 percent. The recent oil price war and the outbreak of the COVID-19 pandemic have further taken a toll on the economy.
Currently, the Central African country owes some international lenders billions of dollars, especially China, but analysts have said that a recent recovery in oil prices has provided some relief.
According to Simon Quijano-Evans, the Chief Economist at Gemcorp Capital LLP, “any re-profiling relief that the country can get from its bilateral lenders, principally China, would be another strong positive.”
As one of Africa’s leading oil producers, one-third of its revenue is generated from the oil sector. However, the country began to experience oil price shocks from 2014 which brought about an economic recession. Debt relief would greatly help the economy recover fast from its current depression.