Angola owes foreign firms $6.8m

Oil-producing Angola owes $6.8 billion — twice what was previously estimated — to foreign firms involved in its post-war reconstruction, President Jose Eduardo dos Santos admitted on Monday.

But in a rare news conference, the head of one of Africa’s most secretive governments said it would start repaying the debts later this year.

Small and medium-sized building firms would be paid in full in about two months, he said, while big building firms, many of which are Portuguese and Brazilian, would receive 40 percent of their demands later this year, he added.

“The rest of the payment will be made in one or two years,” dos Santos said, standing alongside Portuguese President Anibal Cavaco Silva who had come to Angola with 130 businessmen to press for payment.

Despite the huge sums, which amount to nearly half of the southern African nation’s foreign exchange reserves, analysts said Angola should have no problem paying up because of relatively high international oil prices.

“Higher oil prices and exports will help Angola pay the building firms although the amount now is much higher than our estimates,” said Alves da Rocha, an economics professor at Luanda’s Catholic University.

HIGHER OIL PRICES

Angola, which rivals Nigeria as Africa’s biggest oil producer, began delaying payments after last year’s slump in global oil prices. Their subsequent rise lifted its foreign exchange reserves by 30 percent in the first five months of the year to $15.64 billion and helped stabilise the local currency at around 92 kwanzas to the dollar.

Stephen Bailey-Smith, head of Africa research at Standard Bank in London, said he did not expect payment of the debts to have an immediate impact on reserves or the kwanza.

“That is unlikely because Angola is not paying everything back immediately,” he said.

Around 30 percent of the arrears are owed to Portuguese construction firms, dos Santos said. Brazilian companies are also owed large sums.

Portuguese firms operating in Angola include Mota Engil, Soares da Costa and Teixeira Duarte.

Brazil’s Odebrecht, the biggest builder in Angola, has halved its 27,000-strong workforce in the nation, according to the country’s largest union CGSILA. Camargo Correia, another Brazilian firm, is said to have left Angola.

Portugal lent its former colony 500 million euros in March to start paying the bills on the understanding that the debts would be settled the following month.

But Portuguese companies complained in May that they had not yet been paid and publicly urged the government to cough up, saying many firms were in danger of going bust.

The building debts have also been a source of tension between the International Monetary Fund and a government that wants to issue up to $4 billion in foreign sovereign bonds.

Dos Santos, who has ruled for 30 years, said he would announce in 2011 whether he would run in general elections in 2012.

Source: Reuters