Angola: Central bank cuts lending rate to 15.75 pct; reserve requirements unchanged

The monetary policy committee of the National Bank of Angola (BNA) has lowered its benchmark lending rate to 15.75% from 16.5% while leaving unchanged at 17% the reserve ratio coefficient in the national currency and at 15% the coefficient in foreign currency, the central bank has announced.

In a statement released on Sunday, the central bank says that the committee, which met on Friday, also decided to hold its permanent liquidity absorption facility rate at zero, and that the decisions were made on the grounds that year-on-year inflation fell steadily last year, as well as on the evolution of the monetary base, which contracted 10.71% in the last twelve months.

In December, the National Consumer Price Index (IPCN) was up 1.41% on November and 18.60% on the year, a rate that was slightly higher than that recorded in Luanda province.

According to the BNA, in November and December 2018, a total amount of 638,970,000,000 kwanzas (€1.8 billion) was traded in the interbank market.

The overnight LUIBOR rate was 16.75%, representing a decrease of 1.02 percentage points from its level at the beginning of the year, it notes.

The M2 money supply in national currency, which comprises all bank deposits in national currency and banknotes and coins held by the public, increased 3.10% in December, to 4.5 trillion kwanzas. In the last 12 months, this indicator shrank by 0.52%.

Meanwhile, the BNA states, the stock of outstanding credit in national currency swelled by 0.50% in December, having shrunk by 0.42% in November. In the last 12 months, it has increased by 20.16%.

In the last two months of 2018, the BNA sold $2.2 billion dollars (€1.19 billion) in foreign currency to commercial banks, against $1.5 billion in the the same period of the previous year.

In cumulative terms in 2018, the BNA sold $13.5 billion dollars in currency, up 10.25%.

The country’s gross international reserves shrank to $16.16 billion in December 2018 against $18.23 billion a year earlier, equivalent to 6.8 months of goods and services imports.

The next ordinary meeting of the monetary policy committee is to take place on 28 March.