Test Debt Guide

Country Debt Guide
13
Angola
Debt History
Due to Angola’s high dependence on oil
production and exports (see below), GDP
growth has generally reflected the movement in
oil prices, with annual GDP growth averaging
7.8% over the past two decades. However, since
2016 Angola has suffered annual recessions and
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is only forecast to return to growth in 2021.
ANGOLA IN 2021
2.6% economic growth
107.5% public debt to GDP ratio
-0.13% budget balance
3 / 8 DR’s Debt Transparency Index
The country’s undiversified economy, along with the legacy of a prolonged civil war that only ended in the early
2000s, created problems with debt accumulation, with public debt as high as 220% of GDP in 1995. Although
Angola was not invited to take part in multilateral debt relief initiatives, it did benefit from a small cancellation by
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China, and the country gradually decreased public debt during the mid-noughties.
Angola’s public debt to GDP ratio has increased substantially over the past decade, breaching 100% of GDP in
2019, the highest rate in Africa and among the ten highest in the world. The major cause of the growing debt to
GDP ratio has not been increasing debt itself, but instead the decreasing size of the economy, which is forecast to
shrink by a further 1.4% in 2020. The COVID-19 pandemic is leading to a further deterioration of government
finances with the debt to GDP ratio forecast to peak at 120% by the end of 2020.
$14.5 million Chinese debt relief
Not Part of HIPC Initiative
In 2019, the government introduced a three-year Medium-
Term Debt Management Strategy, which included new tax
measures, spending cuts, and privatization of state-owned
companies, to strengthen government finances and ensure
debt remained sustainable. The effects were noticeable,
with the government running a fiscal surplus – where
government revenues exceed expenditure - for two
consecutive years.
It is also worth noting that Angola’s score in the Debt Transparency Index this report has compiled is amongst the
lowest, with no publication of government contracts, no effective freedom of information rules, and a highly limited
amount of data available on government websites or data portals.
As Angola’s debt has risen, so has the cost of servicing it; in 2010 interest payments were equivalent to 3.8% of total
government expenditure, yet by 2017 they equated to 11.4%. For comparison, only 5.4% of government
expenditure is allocated to health spending: for every Angolan Kwanza the government spends on health care, two
Kwanza are given to creditors to pay the interest on its debt. This could represent a significant opportunity cost IF
the projects paid for by the debt are not helping Angolans raise their standards of living. The types of projects
Angola has initiated with loans from China and the World Bank are shown below, as a means of illustration.