Picture: 123RF/DMITRIJS KAMINSKIS
Picture: 123RF/DMITRIJS KAMINSKIS

London — Extending a scheme by major economies to halt billions of dollars in debt service from poor nations during the coronavirus crisis would be very helpful, Angola’s finance minister said on Tuesday, promising a lean approach from her country.

The G20’s debt service suspension initiative (DSSI) has helped more than 40 developing world nations defer at least $5bn in official debt payments since April.

An extension is expected in coming days, though it might only be until the middle of 2021 rather than the end as debtor nations had hoped.

“We are very keen ... to have more time regarding the DSSI, the debt suspension initiative,” Angola’s Vera Daves said at an online event as part of the International Monetary Fund (IMF) and World Bank annual meetings. “That would be very useful for us”.

Africa’s number two oil producer has been hit by both the coronavirus and an oil price rout, but Daves said Angola would have a conservative budget to try to keep debt under control.

Debt-to-GDP is set to hit 143% this year, according to ratings agency S&P Global. Daves wants to claw it back to 60% in coming years and under 40% by the end of 2030 with IMF help.

Angola’s government bonds lost more than half their value at the peak of this year’s turmoil. They have recovered sharply since, but state finances were fragile even before Covid-19 hit, Daves said. “We need to remain very conservative and very vigilant to make sure we remain focused and keep our debt sustainable”.

Angola has no Eurobond maturities until 2025 but coupon payments are estimated at close to $700m a year and repayments on Chinese and other loans are sizeable, averaging $3.5bn from 2020 to 2023, and almost doubling to $6.2bn in 2023, according to S&P.

It is set to receive $6.2bn in debt relief over the next three years though, due to agreements with three of its major creditors.

Reuters

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