Angola's finance minister says country stress-testing for lower oil prices, IMF programme more likely

Time of India

27-04-2025

Angola is running stress tests to gauge the potential fallout from a decline in
oil prices
on government finances, Finance Minister
Vera Daves de Sousa
said on Friday, adding that the situation made a request for an
IMF loan programme
more likely.
Sub-Saharan Africa's second-biggest crude oil exporter has based its 2025 budget on an oil price of $70 per barrel, but
Brent oil futures
briefly traded below $60, the lowest level in four years, after US President Donald Trump announced sweeping tariffs on April 2. The contract settled at $66.91 on Friday.
'We are rolling out stress test scenarios,' Daves de Sousa told Reuters in an interview on the sidelines of the
International Monetary Fund
and World Bank spring meetings in Washington.
While a smaller decline in oil prices could trigger a freeze in some spending, a drop to $45 would likely require a supplementary budget, de Sousa said.
The government is working on measures to mitigate the impact of lower oil prices on the revenue side, make tax administration more efficient, and boost enforcement of property taxes, she said.
The oil price drop and recent turmoil in fixed-income markets, especially US Treasuries, has been felt keenly by many smaller, riskier emerging economies - including Angola, which has suffered a sharp drop in its international bonds.
Angola had to pay $200 million earlier this month after JPMorgan issued a margin call on its $1 billion total return swap - a loan issued by the lender in December and backed by the country's dollar bonds.
De Sousa said she was in talks with JPMorgan on measures that could be implemented to avoid another margin call and that she had no negative feedback from ratings agencies or investors on the payment being triggered.
'There are no negative connotations ... they were positive, surprised that we were able to mobilize such an amount of money so fast,' she said, adding that the government was studying the option of requesting a financing programme from the IMF.
Asked about Chinese loans backed by oil, de Sousa said the government had to pay back another $8 billion, which it expected to be able to do by 2028 rather than 2030-2031, as previously anticipated.
Angola also is borrowing more money from China, mostly from China's EXIM bank, which was not backed by collateral but concessional and earmarked for specific projects such as boosting internet capabilities in rural areas or improving education.
De Sousa said Angola would like to tap international capital markets again, but is not planning to do so at this time.
'We want to go to the market, but the way they are performing now - this is not the moment. We will continue to look at it and make sure that we are ready if the moment comes.'
De Sousa also said Trump administration officials had reiterated in meetings in Washington their commitment to funding the Lobito rail corridor, without specifying the amount. The project aims to help transport critical minerals from the central African copperbelt to the West.