Angola’s state newspaper, Journal de Angola reported that the country has secured a $2 billion credit facility from the China Development Bank to build and complete various infrastructures in progress in Angola. So far, the terms of the agreement such as repayment time and interest rate to be applied to Angola have not been revealed.
This development highlights China’s impressive streak of funding massive infrastructure projects across Africa. The country is considered to be the largest foreign financier of Angolan infrastructures and is estimated to have proved funding worth up to $23 billion. Loans secured from China have been used to build infrastructure projects such as roads, power stations, bridges, hospitals and houses in Angola.
The legal agreement, which was signed by the Angolan Ministry of Finance and the Development Bank of China, comes at a time when Angola is trying to diversity its economy since a fall in the price of crude since 2014 plunged it into recession.
Since then, Angola, Africa’s second largest oil producer has experienced a significant decrease in revenues, which led the Executive to approve a General State budget in 2018 with an estimated GDP deficit of 2.9 percent. A huge part of the country’s revenues are earmarked for repayment of debts.
Angola’s growing debt burden, which the government said will rise to $77.3 billion or 70.8 percent of GDP by the end of 2018, has made investors concerned.
President Joao Lourenco, who took over after the 38 year rule of Jose Eduardo dos Santos, promised to improve the economy by opening up the country to foreign investment and prioritising sectors such as agriculture and tourism.
To help counter budget deficits and kick start the economy, Angola has focused on pursuing economic policies that involve greater control of banking and tax collection. However, economic growth of the country has remained sluggish.