The IMF announced last week a 3-year USD3.5bn lending program to Angola. This is good news in some way as it shows the country’s willingness to stricter conditionality. In our view, the size of the program will not be enough to cope with Angola’s high financing needs since the proceedings from the USD3bn Eurobond issuance made in May have already been spent. It came along with conflicting signals about Angolan reliance on Chinese loans. Angola represents 30% of the total loans granted by China to African economies and a new USD2bn credit was secured in October. There is evidence that Angola is servicing its debt to China through oil shipments, a risky situation especially when the value of this collateral falls (the Brent oil price dropped from 85 to 60 USD/bbl during the last weeks). Since public debt is at 80% of GDP and external debt increased to 65% of GDP in 2018, a lower oil price should weigh on the 2019 outlook. We expect a fourth year of recession (-1% growth, after -3% in 2018).
