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Lusa - Business News - Angola: China loans no longer linked to oil, on better terms - treasury official
Luanda,Jan.23,2023(Lusa)-Angola's financial relationship with China, its main creditor,has changed and oil is no longer used as a guarantee for loans, which are now to be made under "more advantageous" conditions, a top government official has told Lusa. In an interview with Lusa, the secretary of state for finance and the treasury, Ottoniel dos Santos, spoke of the need to continue to undertake "careful management" of the country's debt in the face of market uncertainties. "It will be necessary for all market agents to be very attentive to understand what opportunities there will be to issue" debt, he said. "The ideal will be to manage the issue as carefully as possible, so as not to have to resort to the market in such harsh conditions." In order to fund government spending foreseen in the state budget "and all the important projects that the Angolan state has," he said, the government is talking to all its partners, including China, so that "they can support efforts to diversify the economy and the construction and implementation of projects that are associated to the strategy of growth of the economy." On Angola's financial relationship with China - with which a new €231-million concessional loan was signed last week, to finance broadband projects - the secretary of state said that the two countries, which this year celebrate 40 years of diplomatic relations, have entered a new phase. "This loan from China, we can say that it is the opening of an avenue that we think can be successful, both for China and for Angola," dos Santos told Lusa, stressing that it was a concessional loan. "The conditions of a credit of this type are extremely advantageous." This is, he said, the first time that China has provided the country with credit under these conditions, "which include terms of up to 20 years and interest rates below market rates." The minister did not, however, give details of the interest rate that is to apply, which is still subject to negotiation. "It is a loan that is not associated to oil production: it does not have oil as collateral," he stressed. "We are going to turn a page so that we can have mechanisms in Angola-China relations that are, from a financial point of view, in line with the strategy of the two countries." Dos Santos also addressed the issue of green debt, which he said is "a new path" that Angola wants to follow. "We want to focus on the well-being of the people," he said. "These debts that are associated with sustainability and governance commitments help us to define strategies to attract funding for projects associated with this type of expenditure. We want to finish all the preliminary work so that, at the end of this process, we can start making the issues." The MPLA government's budget bill for 2023 foresees spending of 45% to service debt - lower than the 55% provided for in the 2022 budget - taking into account improved conditions and "careful management" of public debt, the secretary of state noted. "Following the debt strategy, the focus is on stability and on finding financing with longer maturities," he said. Regarding the new debt authorised by Angola's president, João Lourenço, to finance public works and other projects until the 2023 budget is fully approved in parliament, dos Santos said that everything is being done according to the constitutional rules. "These acts [presidential decrees] are public and all projects are funded based on the limit that exists in the [state budget] to carry out those works, for example, those that are included in the Integrated Plan for Intervention in Municipalities," he said. "When necessary the intervention of the holder of executive power is requested so that he can authorise the funding." The secretary of state said that debt is contracted "in one financial year and [funds] take two to three years to be disbursed," as a project is not usually completed in the same financial year, which is why they can appear several times in state budgets over the course of their execution. In terms of the need for limits on debt, he noted that the public finance law already limits net indebtedness to 60% of GDP, and so "the projects to be funded should [be based on] that analysis." In 2020, Angola's net debt was 130% of gross domestic product, but in 2021 it fell to 86% and is estimated to have fallen below 57% last year. "There is scope and there are conditions so that, by continuing with rigour and discipline, we can begin to pass on to the real economy the well-being that the indicators show," the secretary of state stressed. RCR/ARO // ARO. Lisa Agency : LUSA Date : 2023-01-24 10:16:00
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