"The expected payment of 547 million dollars to Angola as part of the 3.7 billion dollars program is probably being postponed due to uncertainty over Angola's debt restructuring negotiations with China," writes the director of the African department of the consultancy Eurasia.
In the note sent to investors, and to which Lusa had access, Darias Jonker considers that "the request to increase the program by 740 million dollars should be approved, since this increase is still within Angola's allocation of special drawing rights in the Fund.
The IMF should have sent a new tranche of the loan agreed at the end of 2018 by July 30, but argued with the vacations in the first half of this month to justify not sending the funds.
"This postponement of the board's decision and the increase in the program's total allocation was probably due to the fears of some of the administrators, and the IMF itself, about debt restructuring talks with China," writes the analyst.
From Eurasia's point of view, relations between the IMF and Angola are "very stable under the presidency of João Lourenço, who sees the program as the most sustainable way to sustain growth and economic reforms".
The government wants to avoid restructuring the Eurobonds, "since it will have a particularly negative effect on the opinion of the quality of sovereign credit, which in turn would have a weakening effect on the banking sector," the analyst continues, stressing that "it will not be necessary to restructure debt securities for the time being, but this remains an option if the downside risks materialize".
Angola owes about 22 billion dollars to China in loans from two major banks, the China Export and Import Bank (Exim Bank) and the China Development Bank (BDC), in addition to the commercial bank ICBC, and there are reports that negotiations with the BDC are advanced, unlike negotiations with the Exim Bank, according to Eurasia.
The strategic partnership between the two countries is not in question, considers the analyst in the note sent to customers, but the contours of the negotiations will have important consequences for both countries.
"Due to Angola's extremely high debt, which will pass 120 percent of GDP this year, and the risks related to the pandemic, an agreement with China's three largest creditor banks that contemplates more than a simple extension of loan maturity is seen by some IMF administrators as essential to solving Angola's debt sustainability problem," according to the note.
In addition, Darias Jonker concludes, "transparency about these agreements, which remain to be disclosed, represents an important precedent for future agreement under the DSSI [Debt Service Suspension Initiative], as China's contribution to this has so far been limited to interest-free loans to developing countries, and when there is more clarity about Angola's debt restructuring, IMF approval should be swift.
