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Angola more exposed to financial crisis

João Lourenço is counting on the First Lady and two ministers to restore Angola's balance sheets after the fall of the oil price and with the country's foreign debt representing more than 100% of the GDP.

The Angolan economy is essentially based on oil exploitation.

Falling world oil prices and the coronavirus pandemic have made Angola one of the countries most exposed to financial crisis. The International Monetary Fund (IMF) today worsened the outlook for the evolution of Angola's economy, now anticipating a recession of 4% this year, which puts the Angolan GDP in decline for the fifth consecutive year.

The rating agency Standard and Poor's has given Angola its highest risk rating of CCC. The country's external debt stands at $8bn this year.

Angola is struggling to meet repayment deadlines for eurobonds issued by the country and will have to mobilise $1.5bn this year.

In an attempt to reverse the trend, President João Lourenço has surrounded himself with those closest to him; notably Edultrudes Costa, director of the president's office. The latter is a protégé of Ana Dias, the First Lady.

Diamantino, the oil minister, who's heavy responsibility of finding a formula to keep the country’s economy afloat, while the price of crude oil is falling. Prior to his post of oil minister, Diamantino was head of Ferrangol, and was President Lourenço's partner in a mining investment.

President João Lourenço relies also on Borges at the Ministry of Energy to come to his rescue when all seems to tip towards an ongoing economic crisis. Borges is in fact the person who made contracts with Privinvest when Lourenco was defense minister. So, one of the inner circles.

Ana Leal, an investigative reporter for TVI, a channel based in Portugal, is investigating Borges, the head of state's right-hand man. According to analysts on the ground, the reporter’s investigation is focused on conflict of interests outside of Borges diplomatic duties, involving private investments held with his sons and associates.

The team that advises the Angolan president is supported by Ana Dias Lourenço, João Lourenço's wife. Ana Dias Lourenço’s influence started in her former role as director of the World Bank for four years.

Previously very involved in financial matters, the Angolan first lady is bringing her financial expertise to fend off the increasingly unbearable situation in Angola, where her husband's promises to improve the population's daily life have been slow to materialise, even more so those to fight corruption. It should be noted that the negotiations over Angola's debt to China are being conducted by three public banks: China's Eximbank, the China Development Bank and the Industrial and Commercial Bank of China. Needless to say, China is the US’s number one controversial business partner.

Meanwhile, public finances are scarce and Angola needs to hope for a miracle at the end of the Covid-19 lockdown, which has started to ease. A miracle that will revive its economy, up until now fundamentally dependent on oil exploitation.

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