Angola

Angola Faces Up to Debt Crisis

With an external debt burden approaching $50 billion, a plea from Angola to reschedule its repayments is a stark reminder that some African economies were in deep trouble even before the coronavirus outbreak, Bloomberg News reported. Details are sparse. President Joao Lourenco said on May 30 sub-Saharan Africa’s fourth-biggest economy had started talks to renegotiate its debt, without specifying which loans or Eurobonds are affected. The finance ministry has since announced plans to “re-profile” borrowings from nations that buy its oil.

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Angola is in talks with key lenders to reschedule debt payments after a prolonged recession triggered by a drop in crude prices raised concerns about the sustainability of the African nation’s finances, Bloomberg News reported. The discussions have resumed after an interruption of about three months due to the Covid-19 pandemic, President Joao Lourenco said in a speech broadcast on state-controlled RNA Radio on Friday. He didn’t give details about the loans or specify if the talks included Eurobonds.

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As the coronavirus crisis deepens in emerging economies around the world, collapsing currencies, commodity prices, export earnings and tourism revenues threaten to shred the finances of many governments, leaving them scrambling to avoid default, the Financial Times reported. Zambia has already called in advisers to restructure its debt while Ecuador has asked for more time to make coupon payments on three dollar bonds. Few analysts believe they will be the last.

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The Genevan jeweler De Grisogono SA, known for extravagant diamond jewelry worn by the likes of Paris Hilton, filed for bankruptcy, ensnared in a corruption probe involving Isabel dos Santos, the daughter of Angola’s former president, Bloomberg News reported. De Grisogono couldn’t secure a buyer despite talks that lasted several months, the company said in a statement on Wednesday. The failed negotiations forced the company to file for creditor protection with Swiss authorities, which if accepted, will affect 65 jobs in the nation, the company said.

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Angola is hoping sweeping economic reforms will smooth an ambitious plan to sell key state assets, including stakes in oil company Sonangol, a share of Puma Energy and more than 100 other enterprises. Africa’s second biggest oil exporter is in a rush for cash as it struggles to cope with moribund crude prices, slumping output and years of mismanagement that left Sonangol bloated and inefficient, Reuters reported. In August, the government published an extensive list of assets that will be offered to investors via public offerings, stake sales, asset sales or tenders.

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Angola has asked the IMF for talks on a bailout in return for more structural reform in Africa’s second-biggest crude exporter, the Financial Times reported. The IMF confirmed on Tuesday that Angola’s government under President João Lourenço asked “to initiate discussions on an economic programme” supported by bailout loans. The fund “stands ready to help the authorities address Angola’s economic challenges by supporting their economic policies and reforms”, it added.
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As Angola seeks to attract foreign investors to help diversify its oil-dependent economy, the country’s biggest trading partner, China, looks set to take a leading role, but the considerable leverage it is able to wield may leave Africa’s third-largest economy short-changed, the Financial Times reported. With Angola heavily indebted to China, Beijing may drive some hard bargains, as has happened in south Asian countries deeply in hock to the Chinese.
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The former Angolan president’s son and a former central banker are suspected of using accounts at HSBC Holdings PLC and Standard Chartered PLC in an attempt to defraud the country’s central bank by transferring $500 million through these U.K.-based lenders, people familiar with the matter said. The prosecutor’s office in Angola said the money was transferred from Angola’s central bank, allegedly to guarantee a $30 billion financing deal, according to a statement posted on the government website Wednesday, The Wall Street Journal reported.
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The oil price has hit $70 a barrel, its highest level in more than three years, but that’s not proving much help for a country which generates 95 per cent of its foreign earnings from petrodollars. Angola, sub-Saharan Africa’s third-largest economy, began 2018 by scrapping the peg its currency, the kwanza, has with the dollar and warning of a potential renegotiation of its $40bn in external debt, the Financial Times reported.
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Angola has announced plans to ditch its currency peg to the dollar and restructure its debts, becoming the latest previously high-flying African country to bite the default bullet, the Financial Times reported. Jose de Lima Massano, the central bank governor, and Archer Mangueira, the country’s finance minister, announced at a press conference on Wednesday that Angola – the continent’s second-biggest oil exporter after Nigeria – would have to shift to a currency trading band and “renegotiate” its debts, according to wire reports.
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