Higher oil prices help Angola pay off debts to Chinese banks

Second-largest oil producer in Sub-Saharan Africa ramping up repayments well ahead of scheduled end of three-year debt moratorium

Country has borrowed US$42.6 billion – around a third of China’s total lending to African countries between 2000 and 2020

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Oil is a mainstay of Angola’s economy. Photo: Reuters

Published: 6:00am, 27 Jun 2022

A surge in crude oil prices following the Russian invasion of Ukraine is hurting many economies around the world, but high prices are helping Angola, the second-largest oil producer in Sub-Saharan Africa, pay off debts to Chinese lenders.

Angola’s oil revenue rose from US$1.4 billion in April to US$2.1 billion in May, according to data from the country’s finance ministry. Brent crude was trading at US$113.12 a barrel on Friday, up more than 48 per cent since the start of this year.

Data from Angola’s central bank indicates that Luanda resumed principal repayments of Chinese debt in the first quarter of this year, 18 months before the scheduled end of a three-year debt moratorium agreed with Chinese lenders in June 2020.

According to market research company REDD Intelligence, debt owed to Chinese creditors decreased by US$351 million in the first quarter of this year to US$21.4 billion, after having been stable at close to US$22 billion for the past two years.

Angola fell into recession between 2016 and 2020 following a crisis caused by falling oil prices, and China agreed in 2020 to allow it to defer debt payments after the Covid-19 pandemic worsened its economic prospects.

The debt payment freeze was to end in the second quarter of next year.