Angola, Africa’s largest crude producer after Nigeria, is turning to international lenders including Goldman Sachs Group Inc. for cash as it struggles to adapt to the lowest oil prices in more than five years.
The southwest African country secured $250 million each from the New York-based investment bank and Gemcorp Capital LLP of London in separate deals within the past week, the state-run Jornal de Angola reported on Monday, citing decrees by President Jose Eduardo dos Santos.
The Finance Ministry has reduced spending on education, imposed a government hiring freeze and is preparing to cut outflows by a further 20 percent this year to offset the impact of sliding oil prices. Dos Santos has said some large infrastructure projects will be delayed, without specifying which ones. Angola, sub-Saharan Africa’s third-largest economy, depends on oil for about 75 percent of tax revenue and almost all exports.
“For an average price of $60 a barrel, tax revenues will decrease to $32.8 billion compared with $45 billion for 2013,” Manuel Jose Alves da Rocha, chief economist at the Catholic University of Angola in Luanda, the capital, said by e-mail. “There are storm clouds in the behavior of world oil demand.”
The borrowing from Goldman and Gemcorp follows a $2 billion loan to state-oil company Sonangol from China Development Bank, while negotiations are under way with the World Bank about an aid package. Brent crude, the international benchmark, rose as high as $115.71 a barrel in June, before slumping this month to $45.19, the lowest since 2009.
Amilcar Xavier, a spokesman for Angola’s Ministry of Finance, didn’t reply to phone calls, e-mails and text messages seeking comment. Joe Stein, a spokesman for Goldman Sachs based in London, said the company declined to comment.
Goldman Sachs owns 1 percent of Cobalt International Energy Inc. (CIE), the Houston-based oil explorer with wells offshore Angola and ties to Vice President Manuel Vicente that prompted a Securities and Exchange Commission investigation. Goldman owns about a 10th of the shares it did when it bought into Cobalt in March 2012, according to data compiled by Bloomberg.
Angola, a member of the Organization of Petroleum Exporting Countries, pumped about 1.62 million barrels of crude a day in December and is targeting 1.83 million barrels this year as projects by U.S.-based Chevron Corp. (CVX) come on stream.
Net foreign reserves fell to $26 billion in November from a mid-year $30 billion. Inflation rose to 7.5 percent from 6.9 percent in the same period.
The Finance Ministry estimates public debt could reach $47 billion this year if the 2015 budget based on an $81 oil price isn’t revised. The World Bank estimates Angola’s 2013 gross domestic product at about $124 billion.
Luanda is displaying the benefits of recent oil wealth with a new skyline of office and apartment buildings around a renovated bay as it recovers from a 27-year civil war that ended in 2002. Some builders, such as Mota-Engil SGPS SA and Teixeira Duarte SA, may now have to scale back plans, Portugal’s main construction-industry association, Aecops, said last week.