May 07, 2020

Monetary Policy Committee

Considering the lockdown due to COVID-19, as well as its implications for the domestic economy, the Monetary Policy Committee of Banco Nacional de Angola brought forward its next ordinary session, to 7 May 2020, in order to analyse the recent evolution of the main economic indicators.

The impact of COVID-19 on the world economy, as well as the lockdown measures implemented by governments to combat this pandemic, have negatively affected production, distribution, consumption and investment. Additionally, at the domestic level, the economic situation may be affected by the performance of the oil industry and its impacts on the fiscal and external accounts.
In March 2020, the National Consumer Price Index published by the National Statistics Institute showed a monthly variation of 1.85 %, above the 1.72 % in the preceding month, bringing year-to-date inflation to 5.73 % and year-on-year inflation to 19.62 %, higher than that observed in the same period of 2019 (17.56 %). The Food and Non-Alcoholic Beverage Class continues to exert the most pressure on prices in the economy, with a contribution of 61.74 %.

Gross International Reserves were USD 16.40 billion in March 2020, compared to USD 16.39 billion in February, equivalent to a coverage of 8,34 months of imports of goods and services. The same trend was observed in April 2020, with Gross International Reserves registering USD 16.41 billion.

Net International Reserves were USD 10.73 billion at the end of March, representing an increase of USD 38.05 million compared to February. In April 2020, Net International Reserves were USD 10.92 billion.
Based on its analysis, the Monetary Policy Committee decided to:

  • Maintain the base interest rate, BNA rate, at 15.5 %.
  • Maintain the interest rate on the overnight deposit facility at 0%.
  • Maintain the reserve requirement coefficients for domestic and foreign currencies at 22 % and 15 %, respectively.
  • Activate the overnight lending facility, with up to Kz 100 billion, renewable every three months, non-cumulative, during the 2020 financial year. 
  • Include large companies of the productive sector in the public securities discount facility with a limit of Kz 100 billion, initially intended only for small and medium-sized enterprises.

In keeping the key interest rate unchanged, Banco Nacional de Angola reaffirms its commitment to controlling inflation, monitoring the Monetary Base, operational variable of monetary policy, for which a goal in terms of daily average for the quarter of Kz 2.055 trillion was set, until June 2020.
Guaranteeing the availability of the overnight lending facility for commercial banks with an amount of up to Kz 100 billion, aims, essentially, to give stability and predictability to their access to liquidity, if necessary.
By including large corporates in the public securities discount facility, the intention is to provide direct support to the productive sector and to ease the pressure on the cash flow of these companies, major employers, allowing them to continue operating and, consequently, maintain jobs.
The Monetary Policy Committee reiterates its commitment to maintaining price stability in the economy and, to this end, will continue to monitor all determining factors of inflation, on the supply and demand sides.
The next ordinary meeting of the Monetary Policy Committee of the Banco Nacional de Angola will be held on 24 July 2020.