Angola: Government says it ‘takes obligations to investors very seriously’

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Angola: Government says it ‘takes obligations to investors very seriously’

11:26 CAT | 24 Jan 2025

File photo: Lusa

Angola’s Ministry of Finance stressed on Thursday that it “takes its obligations to its investors very seriously” in a statement issued in response to an article in the Financial Times on the country’s level of public debt, saying that that it is sustainable.

“The Ministry of Finance clarifies that the financing contract referred to in the article was executed by Angola in accordance with the agreed terms and conditions until the moment when the creditors were conditioned by international sanctions imposed on them,” reads the statement sent to Lusa, which comes after a creditor alleged a default, because Angola did not pay back the financing it had received, which led to arbitration proceedings.

At issue is the fact that the creditor was subject to international sanctions but argued that Angola should continue to pay the financing, something that the country’s government refused to do because the creditor was on a United Nations sanctions list.

Angola, the statement said, “takes its obligations to its investors and stakeholders with regard to the application of international sanctions very seriously, complying with the sanctions duties imposed by the United Nations, as well as those imposed on it under the agreements established with its investors and stakeholders.”

So far, the Ministry of Finance has refused to reveal which creditor, or group of creditors, has been the target of international sanctions and has placed the country in arbitration proceedings over the debt, the value of which is also undisclosed.

In Thursday’s Alphaville column – titled ‘Will Angola’s mystery debt holdout please stand up?’ – the Financial Times’s asks with some irony “Who are you?” and then adds: “We know you’re out there, because Angola recently used a prospectus for the issuance of nearly $2bn in bonds to bury the rather unfortunate detail that someone has accused the country of default.”

After several paragraphs on the importance of transparency in relations with creditors, investors and the general public, the article, which is signed by FT journalist Joseph Cotterill, recalls Mozambique’s situation in the middle of the last decade, when the ‘hidden debts’ scandal came to light, and the subsequent comments from the international community on the need for transparency, concluding : “We don’t learn.”

In its written response to “comments regarding the transparency and sustainability of Angolan debt in an article published today by the Financial Times,” the Ministry of Finance recalls that it “fully disclosed all material information regarding this matter in the Base Prospectus published on the London Stock Exchange on 20 December 2024.”

It reiterates its commitment “to national and international creditors as set out in the General State Budget” and ends by saying that it is “confident in the sustainability of its debt” and that it “will continue to implement its debt strategy and economic diversification plan with focus.”

The ministry’s response comes after several articles in recent days reported on growing cash flow and liquidity difficulties faced by Angola, which have resulted, for example, in the postponement of the payment of civil servants’ raises from January to March and the increase in the amount of debt by $728 million (€699 million) until 2030, just a few weeks after a $2-billion issue in exchange for a loan of $400 million (€384 million).

In November alone, Angola faces a debt repayment of $864 million (€830 million).

This year, Angola will have to pay out $6.2 billion (€5.9 billion), equivalent to 5.2% of GDP, and 5.4 billion dollars (€5.1 billion) in 2026, representing 4.2% of GDP, following $5.4 billion paid in 2024, says credit rating agency Fitch Ratings in a recent analysis of the Angolan economy. It presents these figures as the total debt that will be paid in these years, which includes interest and payments at the maturity of the loans.

Source: Lusa