Angolan government wants to extend maturity of public debt

5 January 2018

Angola’s government buying back short-term debt, using debt issued with longer maturities, is one of the measures planned by the government to reduce the current trajectory of public debt, the Finance Ministry said on Thursday in Luanda.

In a statement, the ministry referred specifically to the Macroeconomic Stabilisation Programme (PEM), presented on Wednesday in Luanda by the government’s economic team, which notes the need to reduce debt to the reference levels established in the Public Debt Law.

“In this sense, the PEM reinforces the need for fine management of the internal and external public debt portfolio, using the market instruments at its disposal, among other things, to promote the fungibility of securities,” the statement said.

It adds that in terms of the internal market, “the Ministry of Finance, whenever necessary, may make early repayments,” while in the foreign market the aim, “is to fine-tune the management of the State’s liabilities, by making use of the anticipated purchase of short-term debt and taking on longer-term debt.”

“The Ministry of Finance reiterates its commitment to creditors with its compliance with domestic and foreign debt serving, which is an objective that is already reflected in the 2018 draft General State Budget and supported by the current levels of the State’s treasury,” the statement said.

With a central government debt of more than 61% of Angola’s GDP at the end of 2017, the PEM recognises that foreign debt “has increased significantly.”

“The change in the total public debt to GDP ratio shows that if the trajectory continues, Angola will soon face serious difficulties with the sustainability of its debt,” the document said, noting that at the end of 2017 domestic debt was 5.3 trillion kwanzas (US$31.7 billion) and external debt was 4.4 trillion kwanzas (US$2.3 billion).

The document said the government intends to “get a clearer view of the total debt”, including state arrears and private external debt and its flows, “as well as accurate debt service forecasts” as well as “to reduce the expected budget deficit for the 2018 budget [from 2.9% of GDP], to a value between 0% and 3.0%, so as to bring debt onto a sustainable path.” (macauhub)