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Lusa - Business News - Angola: State may issue green debt in 2024, wants lower interest rate - minister
Washington, April.18,2024(Lusa) - The Angolan minister of finance, Vera Daves, told Lusa that issuing green debt later this year was "not out of the equation", but regretted that the interest rate was not lower. "It's not out of the equation. We have a stabilised operational framework, which was prepared with the support of specialised consultants, in line with the best practices of the International Capital Market Association, so we are sure that we have a good operational framework to organise a sustainable debt issue," said the minister in Washington, on the sidelines of the 2024 Spring Meetings of the International Monetary Fund (IMF) and the World Bank on Thursday. Vera Daves said she already had a list of potentially eligible projects as part of the process to "make an issue, whether it's 'blue' or 'green' debt", but regretted that the premium for issuing this type of debt was not more favourable. "We think the premium could be better. The interest rate could be lower (...) We are once again in dialogue with different partners so that at any moment we can be ready to move forward. The homework is happening and now it's just a question of timings," she told Lusa. Green or blue debt are debt securities that fulfil environmental, social and governance (ESG) improvement criteria, and have become increasingly common in the context of the fight against climate change, which means they have a lower interest rate than commercial debt and appeal to a new class of investors who are looking for socially responsible financing in exchange for profit. Regarding the exchange of debt to Portugal for green investments, similar to what is being prepared between Portugal and Cabo Verde and São Tomé and Príncipe, Vera Daves confessed that the analysis of this possibility is still "at a very embryonic stage". "We have been studying this possibility," but for Angola it would be fundamental to ensure savings depending on the exchange and that the projects selected had a social and economic impact, explained the minister. During the Spring Meetings of the IMF and the World Bank, the director of Angola's debt management unit will have meetings on this very subject, in the hope that the African country will begin to "build internal capacity, experience and knowledge so that when it moves forward, it moves forward safely," added Vera Daves. On the issue of debt on the international markets following the recent market consultation, the minister said that "the perception of risk (...) does not yet allow" Angola to do so at the rates it considers acceptable, "always one digit (...) and below 9%, 8%". She did, however, admit to some "flexibility" in terms of the financial terms they are willing to accept. In terms of amounts, the annual debt plan indicates US$300 million, but this is "a benchmark" that can be "reallocated between the different categories of foreign debt", so "everything is still open", she said. The minister announced that, during the Spring Meetings, Angola will organise a forum with international investors, where she will share "recent developments and understand what questions they have". The Angolan minister's visit also comes at a time when the US think tank Center for Economic and Policy Research estimates that Angola will have to pay US$160 million (€150.5 million) in surcharges to the IMF for its loan profile. Since 1997, the IMF has imposed, in addition to regular payments, additional fees, called surcharges, on loans to many of its most indebted borrowers. Questioned by Lusa, the minister assured that Angola "will naturally continue to honour its commitments, even if they are painful". "Angola is concerned about honouring its commitments and is trying to be straightforward so that it can continue to count on the trust of those who are its creditors," she said. However, she also called for greater flexibility on the part of international institutions, especially for middle and low-income countries. Vera Daves also said that Angola would continue to advocate "in the appropriate forums (...) for debating reform of the Bretton Woods institutions," that a balance be struck between the need for these institutions to be financially sustainable and to be able to keep an entire structure functioning, but without making "the situation of countries that are already under stress even more difficult". The finance minister emphasised that there are countries suffering from debt-related stress - "in some cases asphyxiating" - but also from a large infrastructure gap, social indicator stress that requires attention, poverty stress or climate change management, including floods and drought. "So there is already so much going on and so many challenges to manage, that having the support and flexibility of institutions like the IMF, reducing as much as possible the charging of commissions and fees for the case of countries that are under stress, would undoubtedly be welcome," she appealed. MYMM/AYLS // AYLS Lusa Agency : LUSA Date : 2024-04-19 11:17:00
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