"Angola's problems in 2020 are so disastrous that none of the [financial] solutions will be sufficient individually; further expenditure consolidation is necessary, but the withdrawal of US $ 1.5 billion from the Sovereign Fund is essential for liquidity this year , ”Reads an analysis of the economy.
“More multilateral loans can guarantee another 1.5 billion dollars this year, but the difference to be covered is still much larger, so a significant part of the external debt to be paid this year (8 billion dollars) has to be restructured ", defends in the analysis.
In the document, which points to the serious weaknesses in public finances following the fall in oil prices and the impact of the covid-19 pandemic, BFA analysts stress that "the fall in imports resulting from the huge decline in economic activity will help to balance the accounts, but additional currency depreciation will be necessary ".
The document, sent to customers and to which Lusa had access, details that "the impact on the balance of payments, if no action had been taken, could have been more than 8 billion dollars, in drop in oil revenues, debt not issued and fall in imports ".
This translates, they point out, "into a true balance of payments crisis", warning that "international reserves may possibly be canceled in a relatively short period, or else a 'default' [Financial Failure]".
In the analysis, the BFA's economic studies office details that "a significant part of the problem remains unresolved", but points out that "the country will not necessarily have to achieve a balance in external accounts this year".
Even so, he stresses, "the shock must be softened as much as possible", so "part of the solution may come from the renegotiation of the external debt, which is certainly underway, at least for creditors to whom payments are due this year" .
In addition to the debt renegotiation, which President João Lourenço confirmed last week is underway, BFA says that "there is a high likelihood that additional funds will be obtained from multilateral institutions with the African Development Bank, the World Bank or the International Monetary Fund, for a total of between 1 and 1.5 billion dollars ".
What is certain is that, they conclude, "the greater the imbalance in the external accounts, the greater the adjustment will have to be, either through the free depreciation of the currency, or through the imposition of greater restrictions on imports and the outflow of foreign currency".
