Lula plans to renegotiate debts of African countries as an asset in the G20 – 02/16/2024 – World

The government of President Luiz Inácio Lula da Silva (PT) is working on a plan to renegotiate debts that nations on the African continent have with Brazil.

Currently, nine African countries have disputes with Brasília. They are: Mozambique, Congo, Senegal, São Tomé and Príncipe, Ghana, Mauritania, Guinea-Bissau, Guinea and Zimbabwe. These debts currently total US$ 280 million (R$ 1.3 billion, at current prices)

The proposal that has been prepared provides for a renegotiation that even includes a reduction in values. Only Zimbabwe should not be considered, as there is an assessment that the country’s debt is insoluble.

The expectation of Lula’s assistants is that these plans will be discussed individually with each country and put into practice in the second half of the year, before the G20 heads of state summit in Brazil, in November. One of Brazil’s objectives is precisely to use this action as an example to pressure developed nations to adopt similar measures.

The plan was confirmed to Sheet by Lula’s aides at the Planalto Palace. The president intends to discuss the issue with some heads of state from that continent on the sidelines of the African Union summit in Addis Ababa, the capital of Ethiopia.

The matter is being analyzed by the Ministry of Finance, which is studying the conditions for possible installments and possible discounts on values.

According to people who follow the topic, the processes relating to the debts of Mozambique, Congo and Senegal are already advanced. A little behind, but still evolving quickly, is the plan to renegotiate the São Tomé and Príncipe balance.

Mozambique is currently the African country with the largest debt to Brazil. The country owes US$143 million (R$604 million) to Brazilian coffers. These amounts refer to two loans granted via BNDES (National Bank for Economic and Social Development), the resources of which were allocated to works at airports through the Mozambican state-owned company ADM-EP. The works were carried out by the former Odebrecht (currently Novonor).

Mozambique initially appeared on Lula’s itinerary for his current trip to Africa, but ended up being removed due to logistical problems that would excessively increase the period outside Brazil.

The second largest debt is that of Mauritania, which owes US$48 million to Brazil. Next comes Guinea-Bissau, with an already overdue debt of US$25 million.

This amount owed by African countries could almost double in the coming years, if there is no renegotiation. This is because, with the exception of São Tomé and Príncipe, all the others still have balances that will mature in the future, of US$437 million.

The president arrived in Cairo on Wednesday (14) for the start of a five-day visit to the African continent. In the Egyptian capital, the itinerary included a meeting with the dictator Abdel Fattah al-Sisi, a visit to the headquarters of the Arab League and a speech, as well as sightseeing in the pyramids alongside the first lady, Janja.

Lula then went to Ethiopia to participate in the African Union summit, in addition to having a series of meetings with presidents of the continent on the sidelines of the event. In these meetings, Lula intends to address the debt issue, although the official announcement will be delayed, according to information obtained by Sheet.

A government interlocutor states that an announcement abroad, without consultation with political leaders, could cause problems in the processing of these debt renegotiation plans. The measures need to be evaluated by the Senate Foreign Relations and National Defense Committee.

Members of the Lula administration argue that the debt renegotiation plan is a relatively simple process, which was stalled due to a lack of political will on the part of recent governments. The main benefit, they argue, is that, once the debts are resolved, Brazil opens the way to once again finance exports to these countries, including services, which includes infrastructure works — something that has been defended by the government.

Lula sent a bill to the National Congress at the end of last year to authorize the BNDES to resume the export of services, which had been suspended since 2017 due to accusations of corruption involving Brazilian construction companies.

The government seeks to resume export financing, especially for Angola and Mozambique, countries with a historical affinity with Brazil and with a more developed market in the African context.

The assessment is that, without financing, Brazilian companies will not be able to compete in African countries. In addition to the export of services and manufactured products, the Lula government maintains the expectation that agribusiness will have a great weight in exports to African countries, whether through the sale of products or through cooperation, via Embrapa.

This will not be the first time that a PT government has promoted debt forgiveness for African countries. In 2013, Dilma Rousseff announced the renegotiation of almost US$800 million in debts from nine African countries.

The measure ended up generating criticism of the president for the fact that forgiven debts could turn into new unpaid debts. On the other hand, debt forgiveness effectively resulted in the opening of the market, as shown by Sheet at the time.

Lula has repeatedly defended debt forgiveness for African countries, to boost the region’s economic development. “This debt is becoming unpayable because the budget money is never enough to pay, and the problem is always increasing. What is the logic? It is trying to raise awareness among the people who own these debts so that they [dívidas] be transformed into infrastructure support. The debt money, instead of being paid, would be invested in infrastructure works”, said the president during a visit to Angola, in August last year.

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Debts of African countries with Brazil

Mozambique – US$ 143 million

Mauritania – US$48 million

Guinea-Bissau – US$ 25.2 million

Zimbabwe – US$16 million

Ghana – US$14 million

Congo – US$ 13.4 million

Senegal – US$ 10.7 million

Guinea – US$5.1 million

São Tomé and Príncipe – US$4.4 million