Instruction No. 02/91: Monetary Policy - Mandatory Reserves Regulation

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INSTRUCTION NO. 02/91 Subject: MONETARY POLICY

• Mandatory Reserves Regulation This Instruction defines the mandatory reserves regime to be established in accordance with Notice No. 01/91 of the Government of the Banco Nacional de Angola. 1st - Institutions Subject to Mandatory Reserves All financial institutions operating in the Country are subject to maintaining mandatory reserves, namely banking institutions, special credit institutions, and parabancário institutions. 2nd - Base for Mandatory Reserves The base for mandatory reserves consists of demand and time deposits in national currency, covering the following accounts in class 3 of the Chart of Accounts of the Financial System: I – Deposits of Residents – NC II – Deposits of Non-Residents – NC 3rd - Eligible Assets for Mandatory Reserves Only the balances of the demand deposit account opened at the Banco Nacional de Angola, in the name of each Institution, relative to the daily closing balances are eligible for constituting mandatory reserves. The aforementioned balances are those recorded in the accounting records of the Banco Nacional de Angola, and may be provided to Institutions from 12:00 hours on the next business day. 4th - Coefficient of Mandatory Reserves

1. The coefficient for mandatory reserves is twenty percent (20%).

2. Financial Institutions that, after the entry into force of the Organic Law of the Banco Nacional de Angola, have started or will start attracting deposits, will benefit, at the beginning of their activity, from a transitional regime.

3. The benefit referred to in the preceding point consists in the application of an initial coefficient of 4%, which will progressively tend towards that fixed in the preceding nº 1, at a rate of 1/5 per month. 5th - Method of Calculating Mandatory Reserves

4. Mandatory reserves are calculated in terms of the arithmetic mean of the balances on Fridays of each month.

5. The arithmetic mean of the daily balances of demand deposits at the Banco Nacional de Angola, in each month, shall not be less than the value resulting from multiplying the coefficient fixed in point 4th by the average amount of weekly balances, in the respective penultimate month, of the items constituting the base for incidence, in accordance with point 2nd. The period for constituting mandatory reserves begins on the 10th of each month and ends on the 9th of the following month, with the balance of the preceding business day prevailing on non-business days of that period.

6. Under no circumstances shall the balance of the Financial Institution's account with the Banco Nacional de Angola be less than 50% of the value of the required mandatory reserves, under penalty of application of the provisions of Article 28 of Law 4/91, combined with Article 41 of Law 5/91. 6th - Remuneration The Banco Nacional de Angola will only remunerate the voluntary deposit of Financial Institutions. For this purpose, a voluntary deposit is defined as the positive difference, in each period, between the arithmetic mean of the daily balances of the bank reserves account and the value of the respective requirement. This remuneration will correspond to the weighted average funding rate of the financial system, with an additional 1% per year, as reimbursement for funding expenses. 7th - Penalties

7. Without prejudice to other measures that may be adopted, the Banco Nacional de Angola will charge a rate not less than 1% per year above the highest interest rate practiced on active operations, on the reserve shortfall determined at the end of each constitution period.

8. The affected Institutions will be notified by the BNA whenever penalties provided for in the preceding nº 1 apply. 8th – Information to be sent to the Banco Nacional de Angola

9. Institutions must send to the Banco Nacional de Angola, with reference to the period indicated in nº 1 of point 5th, the attached table, duly completed.

10. The table mentioned in nº 1 must be sent to the Banco Nacional de Angola by the 5th business day of the month in which the requirement is met.

11. The aforementioned table, duly authenticated, shall be sent in a sealed envelope to the following address:

Banco Nacional de Angola Emission and Credit Directorate (DEC) Av. 4 de Fevereiro nº 157 LUANDA 4. In order to avoid possible delays in receiving that document, Institutions are permitted to deliver it in person to the address indicated above, or transmit it by telefax or telex whenever it is not prepared for mailing in time to meet the delivery deadline. The telefax and telex numbers to be used for this purpose are: Telefax: 390579 Telex: 3123 5. Institutions are obliged to retain and present to Banking Supervision, whenever requested, all documents that allow verification of the information contained in the table referred to in the preceding nº 1. 9th - Final and Transitional Provisions The first period of incidence for mandatory reserves will begin in the month immediately following the publication of Notice No. 01/91 by the Governor of the Banco Nacional de Angola. Luanda, on October 16, 1991. THE GOVERNOR FERNANDO ALBERTO DA GRAÇA TEXEIRA

CALCULATION OF MANDATORY RESERVES Institution: Base Month: Code: Period of Responsible: constitution: Date: from / / to / / Signature: (in millions of new kwanzas) Weekly Positions (Fridays) Interest Rate of ITEMS 1st 2nd 3rd 4th 5th Average I – Demand Dep.-NC: 1- Demand Dep.-NC: -Public Sector Business -Private Sector Business. -Individuals and others. II-Time Dep.-NC: (break down into bands of interest rates) -Public Sector Business. -Private Sector Business -Individuals and Others. TOTAL OF EACH POSITION: REQUIREMENT: 20% of Average – For BNA/DEC use: Values Rates cumulative cumulative Bands funded interest a . b of “c” of “a” d/e (a) (b) (c) (d) (e) (f) DO 1 - - -

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DP - - - Average daily balance of total reserves in the period: Less: value of requirement : Remunerable portion of reserves : Weighted average rate of the System :

(signature of BNA/DEC responsible)