Consider that on Thursday, February 20th, the price of a barrel of Angolan Cabinda oil was $62.19. Yesterday, just 26 days later, the price had fallen by almost half to $32.21.
Given the fact that this is pretty much the only way that Angola earns foreign exchange, both to sustain its economy and to repay its debts, a near 50% plunge in the value of its oil is catastrophic.
WHAT’S NEXT?: Angola pioneered the Resource for Loan (RFL) model in Africa with China, borrowing more from Beijing than any other country on the continent. Now that its ability to repay those debts, valued at around $21 billion, the key question on everyone’s mind is how will the Chinese respond?
In Venezuela, where Chinese policy banks extended Caracas around $65 billion in RBLs over the past decade, Beijing has been very accommodating. So, it’s likely that the Chinese will also demonstrate flexibility with Luanda as well. Pushing a government, especially one that is increasingly friendly with the United States, into default would play right into the U.S. narrative on Chinese predatory lending in Africa — something Chinese officials are determined to avoid.
Read more on this issue in an article published today on Quartz by Africa editor Yinka Adegoke.
