Recently, Africa’s second-largest crude producer, Angola, says it is in the process of renegotiating sovereign and commercial debt repayments. President Joao Lourenco, through a national address, said that COVID-19 has halted oil exploration.
The price crash prompted all international energy majors operating in Angola – Total, Chevron, ExxonMobil, BP, and Eni – to idle or ditch their drilling rigs. Angola’s crude accounts for 90% of its exports
A drop in crude prices coupled with prolonged measures to fight COVID-19 has left the nation with financial constraints. Angola is battling with mounting debt levels and agreements with some of its major creditors that included crude as collateral for loans. The southern African nation is becoming the country with the highest risk for a potential debt restructuring.
According to Bloomberg, Lourenco seems to be reiterating plans to review current debt payment deals with countries like China, in which Angola has been using oil as a means to pay its debt which is over $20 billion.
In 2019, Angola received $3.7 billion in loans from the IMF with the debt-to-GDP above 100%, and debt repayment eating $9 billion annually.
The UNCTAD (United Nations Conference on Trade and Development) is urging for the writing off of close to $1 trillion debts owed by developing countries across the world. The move seeks to cushion the said countries from the negative impacts of the global COVID-19 pandemic.
G20 nations have already suspended debt service payments for the world’s poorest countries starting on May 1 until the end of the year.