Angola's total disbursed external debt, much of which was owed to the Soviet Union and its allies for arms purchases, totaled about US$4 billion in mid-1988. There was only a 0.3 percent rise in medium-term and long-term debt in 1986, but the buildup of arrears after the crash in oil prices resulted in a 145 percent increase in short-term debt. Arrears accounted for US$378 million, including US$224 million owed to Western countries. In 1986 the Soviet Union (Angola's largest creditor), Brazil (the second largest), and Portugal agreed to reschedule debt payments.
By the end of 1986, some debt payments were running seven to eight months late, and some Western export credit agencies denied Angola most medium-term and long-term credits. The depreciation of the United States dollar, to which the Angolan kwanza was tied, has added to the balance of payments pressure. This situation existed because Angola's oil sales were denominated in United States dollars, while many of its imports were priced in relatively stronger European currencies. By 1987 Angola's accumulated arrears (US$378 million) and its debt-service obligations (US$442 million of principal and US$196 million of interest) equaled nearly half of its exports of goods and services.
The government in 1987 attempted to put together a financial arrangement to repay its external debts over a fifteen-year period. The minister of finance proposed raising US$1 billion on the international capital market through the issue of fifteen-year, floating-rate notes to pay off its arrears to Western creditors, to prepay principal due on nonpetroleum-related debts, and to provide approximately US$125 million in revenue. The Paris Club (see Glossary), however, turned down the proposal because of its complexity, uncertainty over its success, and the cost implications for the creditor countries. To provide an alternative, the Europeans advised Angola that they would consider debt rescheduling if the government would seek membership in the IMF. Subsequently, President dos Santos announced in August 1987 that his government intended to apply for membership in the IMF and the World Bank.
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Information on Angola continues to be difficult to obtain. For many years, government policies and the ongoing insurgency discouraged visits by international organizations, journalists, and scholars. By the late 1980s, however, more information was becoming available. The most comprehensive source on the economy was Tony Hodges's Angola to the 1990s. Specific material on economic background was gleaned from Malyn Newitt's Portugal in Africa and Gerald J. Bender's Angola under the Portuguese. Publications of multilateral organizations, such as the UN and the World Bank, are helpful for data on various aspects of the economy. Useful periodicals include the Economist Intelligence Unit's quarterly Country Report, Jeune Afrique, West Africa, Jornal de Angola, Africa Economic Digest, Africa Research Bulletin, Marchés tropicaux et méditerranéens, Afrique-Asie, and Africa Hoje. (For further information and complete citations, see Bibliography.)
Data as of February 1989