Real World Challenges
Edited by Tina Søreide and Aled Williams
Chapter 12: Monopolising reconstruction: Angolan elites and Chinese credit lines
In 2004, China ExportñImport (China Exim) Bank extended a USD†2†billion oil-backed loan to the Angolan government for the purpose of post-war national reconstruction. This dismayed the international donor community, which viewed the loan agreement as having allowed the Angolan government to have escaped the stringent conditionalities regarding transparency and macroeconomic policy that would have been attached to an International Monetary Fund (IMF) loan, the negotiations for which had collapsed just prior to the China Exim Bank agreement (Brautigam, 2009: 275; Global Witness, 2011). The China Exim Bank loan facility has been extended several times and as of 2012 total pledges reportedly stood at USD†10.5†billion. The loan is repayable at 3-month Libor2†+†1.5 per cent over 17†years, including a grace period of 5†years.3 According to Alves (2010: 12) the interest was reduced to Libor†+†1.25 per cent for successive tranches after the first USD†4.5†billion in credit lines. In the Angolan case, added to these terms is the management fee of 0.3†per cent of the loan amount, and a 0.3 per cent ëcommitment feeí (Dubosse, 2010: 75). The Angolan government must provide a down-payment of 10 per cent of the project value of each financed project.Such an arrangement has been the centre of controversy for a number of years, for two main reasons. First, the nature of the mechanism; being a bilateral transaction reduces its transparency.
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