"The Finance Ministry has announced that it has used the G20's DSSI to achieve a suspension of debt servicing of bilateral loans, which will provide significant relief, which will be key to freeing the country from short-term financial and external account pressures, freeing funds to deal with the effects of the covid-19 pandemic," analysts wrote in the weekly review of the Angolan economy.
In the document, sent to clients and to which Lusa had access, BFA analysts add that "the biggest creditors are Chinese entities" and note that "China is in negotiations with Angola".
Angola's public debt has risen sharply in recent years, as a result of the need to cover the deficit caused by the fall in oil prices and the consequent drop in tax revenues, which catapulted the country to the lot of those most affected by the fall in raw material prices.
The assumption of the debt problem as a central issue for African governments was well reflected in the concern that the International Monetary Fund and the World Bank dedicated to this issue during the Annual Meetings in which they made funds available and agreed on a moratorium on the payment of the debts of the most vulnerable countries to these institutions.
On 15 April, the G20, the group of the 20 most industrialised nations, also agreed to a suspension of USD 20 billion in bilateral debt for the poorest countries, many of which are African, by the end of the year, challenging private creditors to join the initiative.
In addition, the UNECA, among other institutions, is designing a plan to swap countries' sovereign debt for new concessional bonds that could prevent the funds needed to fight covid-19 from being used to pay creditors.
This financial mechanism would be guaranteed by a multilateral bank with a triple A rating, the highest, or by a central bank, which would convert the current debt into securities with a longer maturity, benefiting from five years of exemption from payments and lower coupons (interest payments), according to the UNECA.
