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FinanceOil & GasSouthern Africa

Angola seeking G20 debt relief, debt talks with oil importers

Angola has asked for G20 debt relief and is in advanced stages of talks with some countries importing its oil on adjusting financing facilities, but expects no further debt overhaul to be needed beyond this, the finance ministry said on Tuesday.

The third largest economy in sub-Saharan Africa relies heavily on oil revenues and is saddled with debts that exceed its economic output. It is struggling from the economic fallout of the coronavirus pandemic and an oil price shock that saw crude futures plunge below $20 per barrel in April.

Negotiations with oil importers on reprofiling are at “advanced stages” and talks are expected to conclude in the very near future, the ministry said in a statement. It gave no further details.

Reprofiling generally entails an extension of maturities, though often without attempting to reduce the principal.

“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 negotitate debt service standstill on official, Government to Government direct lending,” the statement added.

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Angola, which draws a third of state revenues from oil, had been in a fragile position even before the pandemic, with its debt-to-GDP ratio topping 100%. Servicing the debt eats up $9 billion a year.

Angola received a $3.7 billion loan from the International Monetary Fund last year. It also owes billions to China.

A recent recovery in oil prices had provided some relief, said analysts.

“Any re-profiling relief that the country can get from its bilateral lenders, principally China, would be another strong positive,” said Simon Quijano-Evans at Gemcorp Capital LLP.

“That, in turn, should help secure additional IMF funding if Angola requests it, and further calm the bond market backdrop, especially as the next Eurobond principal repayment is only in 2025.”

The finance ministry said it saw no need for “further re-profiling negotiations with creditors beyond those already in progress”.

Angola’s eurobonds last traded around the 65 cents in the dollar mark across the curve, little changed on the day.

Bonds had tumbled from above 100 cents in the dollar in early March to as low as 30 cents in early April.