Africa-Press. Angola’s Ministry of Finance announced plans to swap part of its debt for health services this year, as part of a broader borrowing strategy that also includes securing support from the World Bank and issuing bonds on international markets.
Debt swap agreements, which focus on social or environmental benefits, are an increasingly common financing tool in developing countries, and have been used in recent years by countries such as Ecuador and Côte d’Ivoire.
A debt-for-health-services swap would enable Angola to replace expensive debt with lower-cost financing, provided that the resulting savings are directed toward the health sector.
Angola, a southern African oil exporter, has in recent years sought to reduce its debt burden after a surge in borrowing—including oil-backed loans from China—led it to spend more than 40% of its budget on debt servicing this year.
The ministry’s annual borrowing plan, presented to the media by officials on Tuesday, stated that the primary focus of debt policy is “to reduce long-term financing costs.”
Under the plan, the government aims to secure approximately $1.4 billion in commercial financing, including through debt swaps, the details of which were not disclosed.
The government is also relying on $500 million in financing through the World Bank’s Development Policy Operation, which provides direct budget support to eligible countries, to help cover this year’s fiscal deficit, according to the borrowing plan.
The ministry announced that an additional $1.7 billion would be raised from international capital markets, adding that part of the external borrowing would come from bilateral creditors and export credit agencies.
The Ministry of Finance expects Angola’s total debt to fall to 45% of gross domestic product by the end of this year, from 47% in 2025, after the national statistics office updated the base year used to calculate economic output.
Updating the base year used by a country to calculate its economic output is an internationally accepted practice aimed at accounting for emerging industries and other developments.
However, this practice can raise questions among economists when it results in significant improvements in the debt-to-GDP ratio.
In December, the International Monetary Fund projected that Angola’s economic growth would remain weak this year at around 2%, with a gradual medium-term recovery dependent on progress in diversifying the economy away from oil.
The government in Luanda is seeking to strengthen public finances by cutting subsidies and opening its state-dominated economy to greater private investment.
