Angola Woes Risk Sharpening Focus on Africa’s Debt

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. Coming on the heels of Mozambique’s default on more than $2bn of secret loans used to purchase a non-existent tuna fleet in 2016, Angola’s woes may sharpen investors’ focus on the worsening debt metrics across sub-Saharan Africa. Debt servicing costs have risen to a 16-year high of 12.2 per cent of government revenues, according to Fitch Ratings. Angola’s predicament also illustrates an ever-present challenge for emerging market countries: the delicate dance between the value of its currency and meeting payments on those debts it has in foreign currencies, typically dollars. Read more. (Subscription required.)