CDB reprofiles $13.6 billion of outstanding debt for Government of Angola in December 2020 (Linked to Project ID#53063)

In December 2020, the China Development Bank (CDB) and the Government of Angola entered into an agreement to reprofile multiple loan agreements that they had previously signed, including a $15 billion loan agreement from December 2015 (captured via Project ID#53063). The December 2020 agreement included (i) a three-year deferral of principal payments; and (ii) repayment of deferred principal falling due in 2020H2–2023H1 over seven years after the grace period, with some additional modest relief of principal in 2024–25. The Government of Angola also agreed to use the outstanding cash balance in an escrow account — known as the Debt Service Reserve Account (DSRA) — to make interest payments to the CDB between 2020 to 2022, which it expected would bring the DSRA balance to nearly zero by mid-2022. However, under the terms of the debt reprofiling agreement, the parties agreed that the borrower would need to replenish the DSRA to approximately $1.5 billion (the minimum cash balance previously agreed upon by the lender and borrower) by 2023. The Government of Angola’s debt outstanding under various loan agreements with CDB was $13.6 billion as of December 31, 2021. The Government of Angola and the Industrial and Commercial Bank of China (ICBC) also reprofiled multiple loans in 2020 and 2021 (as captured via Project ID#95416). According to the IMF, the reprofiling agreements with CDB and ICBC jointly produced cash flow savings worth $1 billion in 2020, $1.9 billion in 2021, $1.8 billion in 2022, and $200 million in 2023.

Additional details

1. Pg. 38 of IMF Country Report No. 21/17 (https://www.imf.org/-/media/Files/Publications/CR/2021/English/1AGOEA2021001.ashx) provides an estimate of cash flow savings — without consideration of operations related to the Debt Service Reserve Account (DSRA) — as a result of the CDB and ICBC loan reprofiling agreements. 2. There is some evidence the CDB rescheduled two additional loans with the Government of Angola in December 2020. According to SAIS-CARI Briefing Paper #9 (https://static1.squarespace.com/static/5652847de4b033f56d2bdc29/t/64303cd252cc4045dafc811f/1680882899126/Briefing+Paper+9+-+China+and+DSSI+-+April+2023+-+V5.pdf), which was published in April 2023, 'CDB agreed to defer principal payments for a three-year period for their largest line of credit (US$ 15 billion, signed in December 2015, with a 12-year term, according to CARI data) with repayment over seven subsequent years. Two smaller [CDB] facilities had their principal repayment period lengthened by three years. No penalties would be applied.' This issue warrants further investigation. 3. According to SAIS-CARI Briefing Paper #9 (https://static1.squarespace.com/static/5652847de4b033f56d2bdc29/t/64303cd252cc4045dafc811f/1680882899126/Briefing+Paper+9+-+China+and+DSSI+-+April+2023+-+V5.pdf), which was published in April 2023, 'Angola agreed to pay interest during the three-year moratorium, and CDB would lower the minimum saving requirement in the related debt service escrow account, allowing Angola to draw all the US$1.5 billion from the account to cover most of their interest payment during the grace period. Angola agreed to replenish the account after the grace period. This is similar to the DSSI debt service moratorium in a sense that the debt repayment reserve escrow account was already established (these accounts normally contain enough funds for 1.5 debt service payments). Angola did not need to mobilize additional resources for any payments to CDB during the grace period. At that point, the DSSI moratorium had been extended a further six months, to the middle of June 2021, with the suspensions followed by a one-year grace period, with repayment made over three to five subsequent years).'

Number of official sources

3

Number of total sources

8