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Angola Taps Goldman Sachs for Cash as Low Oil Price Cuts Revenue

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
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.

New Projects

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.

Oil Wealth

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.

To contact the reporter on this story:
Colin McClelland in Luanda at

To contact the editors responsible for this story:
Antony Sguazzin at
John Bowker, Emily Bowers

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Angola Taps Goldman Sachs for Cash as Low Oil Price Cuts Revenue

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