Angola reassures IMF on debt management reforms


Angola, which is preparing to issue a new bond, has assured the IMF it will implement reforms to improve debt management and needs $6 billion in credit lines in 2010 to rebuild from a 27-year civil war.

In a letter of intent published by the IMF yesterday, Angola’s economy ministers outlined reforms to “strengthen our credibility with international bond investors as we complete our plans for a debt bond issue.”
“Our debt management capacity is yet to be at par with those of many other emerging market countries and we acknowledge the urgent need to strengthen our debt management capacity,” the ministers said in the letter dated April 26.

The ministers said reforms would improve its debt management unit in the Ministry of Finance, establish direct reporting lines for the unit to economic ministers, and develop a clear medium-term debt strategy.

Angola, which rivals Nigeria as Africa’s largest oil producer, agreed to a $1.4 billion IMF loan package in March as government revenues were hard hit by a sharp drop in oil prices and exports in 2009. It plans to sell $2 billion of domestic debt in the second half of May.

Global ratings agencies gave Angola a debut “B+” rating for foreign debt on Wednesday, the same as Nigeria, bringing it closer to issuing international bonds.

The letter also requested more flexibility in its IMF program on external borrowing to finance its reconstruction needs, most of it for basic infrastructure destroyed during the civil war.

It said some projects had been contracted with China, which has previously provided loans to Angola in exchange for oil.

The letter said the government needed to contract a total of $6 billion “projects-related credit lines” in 2010, and noted significantly lower amount of contracts are envisaged for future years.