Not only does Angola’s status as the continent’s second largest oil producer (the West African state produced 1.75 million barrels a day of crude in October, according to data compiled by Bloomberg, while Nigeria pumped 2.1 million barrels) make it an intriguing macro story, but so does its Chinese connection: in addition to almost $10bn in loans since 2002, roughly 70,000 Chinese people work in Angola, from crane and bulldozer operators to more-skilled railway technicians, though some commentators contend the cozy relationship has run its course.  And while theoretically such a loss of credit could be somewhat muted against the backdrop of continued IMF largesse, a lower budget deficit, international debt investors lured by S&P’s B+ grade back in June (a rating fueled by the country’s low 22.8% external debt/GDP ratio in 2009 per London’s Exotix), healthy projected domestic output (7.6 percent in 2011 against 6.7 of 2010, per internal reports) and improving foreign reserves, such realization has been thwarted, at least in the short-term, by vexxing decisions that make some critics question the once-communist, now market-wed and ever-opaque MPLA party and José Eduardo dos Santos, its autocratic leader of three decades.  Debts owed to foreign firms and central bank-neutering legislation historically don’t do wonders for a country’s cost of capital, nor necessarily does accomodative monetary policy in the face of inflationary pressures.  To this last point, however, analysts point to the link between Angola’s import driven, non-oil primary fiscal deficit and the need for a more robust private sector to ultimately increase price stability.  In the meantime, eager investors will have to wait for Angola to test the debt waters again in order to see what kind of yield China’s once-playground gets this time around.

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