The diversification of Angola’s economy, which is a major priority for the country’s authorities, will have the support of China and some support instruments will be analysed “very soon” at the mixed commission between the two countries.
The country is facing difficulties as a result of the drop, since 2014, in the price of oil, which made it more urgent to boost the weight of the non-oil sector. As a result of this on 13 June Angola and China discussed economic cooperation at a meeting between multi-sector delegations in Beijing, according to Angolan news agency Angop.
The meeting mainly served to prepare the second session of the Commission for Economic and Commercial Cooperation, along with the bilateral Business Forum, which will take place “very soon” in the Angolan capital, according to the Angolan secretary of State for Foreign Affairs and Cooperation, Angela Braganca, who reiterated that China is one of Angola’s strategic partners.
Preparation involved presenting and discussing a number of legal documents and instruments, which are up for further discussion in Luanda at a meeting to supervise the execution of the plans to boost China-Africa cooperation, announced at the Johannesburg summit in 2015.
These include a boost to financial cooperation and other measures to make economic and trade ties closer. One of the main interests of the African side is productive investments that generate revenues, as well as transfer of Chinese technology.
Among the specific instruments considered for Angola, according to Angop, is the reciprocal promotion and protection of investments, introduction of facilities to visa concessions and execution of agreements on a labour and cultural level.
China is currently Angola’s largest trading partner, both in terms of imports and exports and Angola is China’s largest source of oil in Africa.
China-Angola relations researcher Lucy Corkin has estimated loans provided by China to Angola to total US$14.5 billion, but other estimates point to figures closer to US$20 billion, mostly guaranteed with oil.
The Economist Intelligence Unit (EIU) said that, in the current context, the Angolan government will continue to seek loans from China, to “maintain very necessary investment programmes – to build roads and power plants, for example.”
“China will remain a highly important partner – up to the point when a substantial slowdown in Chinese growth represents serious negative risks,” said the EIU in its latest report on Angola.
The Chinese credit, the EIU said, would be important even if Angola signs up to an IMF programme, which has been under negotiation since April. This could represent additional support of up to US$4.5 billion and boost confidence in the country’s economy.
In fact, the round of talks with the IMF ended last week showed, according to the Africa Monitor Intelligence, that “the authorities are now inclined to delay or prevent a formal agreement” with a view to obtaining financial aid from the IMF.
The Angolan delegation showed it was in no hurry to be granted the financial aid, which implies policy negotiations with the IMF, which may include introduction of new taxes, lay off in public administration and changes to management of oil revenues.
Oil prices are now expected to start rising, as shown by the futures market and, according to Africa Monitor Intelligence Angola’s reticence is considered to be affecting the possibility of a clearer understanding of that trend.
After bottoming out at US$30 per barrel at the beginning of the year, oil prices are now at over US$50 per barrel, despite remaining far from the high of US$90-100 before 2014. These record highs are now generally considered to be an impossibility. (macauhub/AO/CN)