Angola’s interest payments to creditors double as Chinese debt freeze ends

Angola’s interest payments to external creditors, mostly Chinese, doubled from US$775 million in the first quarter of this year to US$1.57 billion in the second quarter as the three-year debt moratorium with Chinese creditors ended.

Angola, which is the continent’s second largest oil producer, is Africa’s biggest recipient of financing from China, having taken out 254 loans worth US$42.6 billion from Chinese lenders. It accounts for more than a quarter of Beijing’s total lending to African countries between 2000 and 2020, according to the Chinese Loans to Africa Database compiled by the Global Development Policy Centre at Boston University.

But the effects of the coronavirus pandemic exacerbated Angola’s debt problems especially in early 2020 when global crude oil prices plummeted to below US$30 a barrel. Oil makes up 90 per cent of the country’s exports, leaving it vulnerable whenever prices fall.

In May 2020, when the Group of 20 launched the Debt Service Suspension Initiative (DSSI) to provide debt relief for poor nations, Angola was one of the countries that applied.

And Chinese lenders, including China Development Bank (CDB) and the Industrial and Commercial Bank of China (ICBC), gave Angola a three-year debt payment freeze for a total of US$4.9 billion, which was to run from June 2020 to May 2023. The Central African nation also received an unknown amount of debt relief under DSSI from China Eximbank.