Instruction No. 16/2020 of October 2 on Monetary Policy – Mandatory Reserves

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INSTRUCTION NO. 16/2020 October 2 SUBJECT: MONETARY POLICY − Mandatory Reserves

Whereas it is advisable to update the existing rules for calculating and complying with mandatory reserves to the current macroeconomic stability framework, aiming at greater efficiency of monetary policy instruments; In exercise of the powers conferred upon me by Article 51 of Law No. 16/10, dated July 15, the Law of the Banco Nacional de Angola. I HEREBY DETERMINE:

1. Banking Financial Institutions established in the country must maintain mandatory reserves in accordance with this Instruction.
2. The incidence base for mandatory reserves, in national currency, consists of the amounts recorded according to auxiliary tables (1, 2, 4, 6, 7, 8 and 9) in the following accounts of the Chart of Accounts for Financial Institutions (ADJUSTED CONTIF):

• 2.10.10. Demand Deposits;
• 2.10.20. Time Deposits;
• 2.10.80. Other Deposits;
• 2.10.90. Other Loans;
• 2.20.20. Sale of Own Securities with Repurchase Agreement;
• 2.20.30. Sale of Third-Party Securities with Repurchase Agreement;
• 2.30.10. Issued or Endorsed Securities and Financial Instruments;

CONTINUATION OF INSTRUCTION NO. 16/2020 Page 2 of 8

• 2.50.20.10. Obligations from Pending Settlement Operations; and,
• 2.50.20.30. Obligations from Tax Collection Services.

3. The incidence base for mandatory reserves, in foreign currency, consists of the amounts recorded according to auxiliary tables (1, 2, 4, 6, 7, 8 and 9) in the following accounts of the Chart of Accounts for Financial Institutions (ADJUSTED CONTIF):

• 2.10.10. Demand Deposits;
• 2.10.20. Time Deposits;
• 2.10.80. Other Deposits;
• 2.10.90. Other Loans;
• 2.20.20. Sale of Own Securities with Repurchase Agreement;
• 2.20.30. Sale of Third-Party Securities with Repurchase Agreement;
• 2.30.10. Issued or Endorsed Securities and Financial Instruments;
• 2.50.20.10. Obligations from Pending Settlement Operations;
• 2.50.20.20. Relations with Correspondents; and,
• 2.50.20.30. Obligations from Tax Collection Services.

4. For the purposes of this Instruction, balances in Bankita accounts, both demand and time deposits in national and foreign currency, are not eligible for the calculation of mandatory reserves, nor are all monthly interest amounts from the incidence base defined in paragraphs 2 and 3 of this Instruction. Eligible for fulfilling mandatory reserves in national currency (NC) and foreign currency (FC) are the assets defined in specific regulations.
5. The calculation of mandatory reserves and their compliance are carried out periodically, on the first business day and from the first to the last business day of the period following the constitution of the balances referred to in paragraphs 2 and 3 of this Instruction.

CONTINUATION OF INSTRUCTION NO. 16/2020 Page 3 of 8 6. The incidence base defined in paragraphs 2 and 3 of this Instruction is subject to mandatory reserve coefficients, as established in specific regulations. 7. The exigibility for the incidence base in national currency, subject to the mandatory reserve coefficient as established in specific regulations, is calculated periodically on the arithmetic mean of balances determined in the respective accounts on business days during the period, following the formula: • ETn = crn {∑ [Dtn (T –1)]/N} In which: • ETn = exigibility of period T in NC, corresponding to the percentage established in specific regulation on the incidence base, excluding accounts of the Central Government, Local Governments and Municipal Administrations; • crn = mandatory reserve coefficient as established in specific regulations; • T = T-th calendar period in which compliance with mandatory reserves occurs, (T=1, 2, 3,...,n); • T-1 = T-th calendar period in which final daily credit balances are constituted, recorded in the incidence base accounts referred to in paragraph 2 of this Instruction, excluding accounts of the Central Government and Local Governments and Municipal Administrations, (T-1=-n, 1, 2,..., n-1); • t = business day of the T-1 constitution period; • Dtn (T – 1) = final daily credit balances recorded in the incidence base accounts referred to in paragraph 2 of this Instruction, excluding accounts of the Central Government and Local Governments and Municipal Administrations, reported on the first business day of the exigibility compliance period; and, • N = number of business days in the T-1 period.

CONTINUATION OF INSTRUCTION NO. 16/2020 Page 4 of 8 8. The exigibility for the incidence base in foreign currency (FC), subject to the coefficient as established in specific regulations, is calculated periodically on the arithmetic mean of balances determined in the respective accounts on business days during the period, following the formula: • ETe = cre {∑ [Dte (T –1)]/N} In which: • ETe = exigibility of period T in FC on the incidence base, as established in specific regulations, excluding accounts of the Central Government, Local Governments and Municipal Administrations; • cre = mandatory reserve coefficient as established in specific regulations; • T = T-th calendar period in which the calculation of mandatory reserves occurs, (T=1, 2, 3,..., n); • T-1 = T-th calendar period in which final daily credit balances are constituted, recorded in the incidence base accounts referred to in paragraph 3 of this Instruction, (T-1= -n, 1, 2, ..., n-1); • t = business day of the T-1 constitution period; • Dte (T – 1) = final daily credit balances recorded in the incidence base accounts referred to in paragraph 3 of this Instruction, reported on the first business day of the exigibility compliance period; and, • N = number of business days in the T-1 period. 9. For the purposes of this Instruction, business days are considered to be the days in the period, excluding Saturdays, Sundays and national holidays. 10. Credit rights may also be deducted from the exigibility in NC, calculated according to paragraph 2 of this Instruction, as per specific regulations.

CONTINUATION OF INSTRUCTION NO. 16/2020 Page 5 of 8 11. The amount for the purpose of deducting mandatory reserves, referred to in the preceding paragraph, is determined based on the position of the last day of the credit portfolio constitution period, granted by the Banking Financial Institution and recorded in the Supervision System of Financial Institutions of the Banco Nacional de Angola (SSIF). 12. The effective value of reserves to be considered for compliance with exigibility in NC is equal to the sum of daily balances of accounts of the Central Government, Local Governments and Municipal Administrations and the amount referred to in paragraph 2 of this Instruction, weighted according to coefficients established in specific regulations, minus the amounts established in paragraphs 11 and 12 of this Instruction, according to the following formula: • ROdn = ∑[GCdn+ (GLdn) + ETn – DCTn (T-1) 1)] In which: • ROdn = effective mandatory reserves in NC to be considered for compliance with exigibility on day d; • GCdn = daily balances of Central Government accounts in NC on day d, weighted according to specific regulation; • GLdn = daily balances of Local Government and Municipal Administration accounts in NC on day d, weighted according to specific regulation; • ETn = exigibility in period T in NC, corresponding to the coefficient established in specific regulation on the incidence base, as referred to in paragraph 8 of this Instruction; • DCTn = value corresponding to credit rights, as per specific regulation; and, • d = business day of the compliance period (T). 13. The effective value of reserves to be considered for compliance with exigibility in FC is equal to the sum of balances of accounts of the Central Government, Local Governments and Municipal Administrations and the amount referred to in paragraph 3 of this Instruction, weighted according to coefficients established in specific regulations, according to the following formula:

CONTINUATION OF INSTRUCTION NO. 16/2020 Page 6 of 8 • ROde = ∑[GCde+ GLde+ ETe] In which: • ROde = effective mandatory reserves in FC to be considered for compliance with exigibility on day d; • GCde = daily balances of Central Government accounts in FC on day d, weighted according to specific regulation; • GLde = daily balances of Local Government and Municipal Administration accounts in FC on day d, weighted according to specific regulation; • ETe = exigibility in period T in FC, corresponding to the coefficient established in specific regulation on the incidence base, as referred to in paragraph 9 of this Instruction; and, • d = business day of the compliance period (T). 14. The submission of data and information regarding the calculation of exigibility, as well as assets for its compliance in FC, must be in NC, at the market exchange rate (Bloomberg BGN) of the previous day's close, and the same applies to compliance with mandatory reserves in FC. 15. Without prejudice to other measures that may be adopted, the Banco Nacional de Angola must apply a sanction equivalent to 1% (one percent) per month, above the highest prevailing interest rate for active operations in national currency, practiced by Financial Institutions during the relevant period, as provided in paragraph 4 of Article 25 of Law No. 16/10, dated July 15, the Law of the Banco Nacional de Angola, on daily shortfalls in mandatory reserves, both in national and foreign currency. The Banco Nacional de Angola must also apply the same penalty retroactively for situations where Banking Financial Institutions provide inconsistent data and information that would imply non-compliance with mandatory reserves in the respective period.

CONTINUATION OF INSTRUCTION NO. 16/2020 Page 7 of 8 16. The collection of charges resulting from the penalties provided for in paragraph 15 of this Instruction is carried out by the last business day of the week following the occurrence, through debit from demand deposit accounts in national currency at the Banco Nacional de Angola, for both NC and FC non-compliances. 17. For FC non-compliances, equivalence will be made through the exchange rate referred to in paragraph 14 of this Instruction. 18. If, by the end of the stipulated term, the amount of said penalties is not settled, the Banco Nacional de Angola proceeds to compulsory debit in the reserve account of the respective Bank. 19. Banking Financial Institutions must be informed by the BNA whenever sanctions provided for in paragraph 16 of this Instruction apply. 20. Daily balances of the items comprising the incidence base defined in paragraphs 2 and 3 of this Instruction, as well as Central Government and Local Government and Municipal Administration accounts in NC and FC, must be transmitted daily to the Asset Markets Department (DMA) of the Banco Nacional de Angola through the SSIF. 21. Procedures and Contingency: in case of unavailability of the SSIF, Banking Financial Institutions are obliged to alternatively send data via email. 22. The data referred to in the preceding paragraph must comply with ADJUSTED CONTIF guidelines and be precise, complete, reliable and verifiable. 23. Banking Financial Institutions are obliged to preserve and present to representatives of the Banking Supervision Department (DSB) of the Banco Nacional de Angola, whenever requested, documents that allow proving the information provided for the calculation of exigibility.

CONTINUATION OF INSTRUCTION NO. 16/2020 Page 8 of 8 24. The term for constituting the incidence base and effective compliance is defined in specific regulations. 25. Instruction No. 17/2019, dated October 24, and all regulations contrary to the provisions of this Instruction are hereby revoked. 26. Doubts regarding the interpretation and application of this Instruction are resolved by the Banco Nacional de Angola. 27. This Instruction enters into force on its publication date. PUBLISHED. Luanda, October 2, 2020. THE GOVERNOR JOSÉ DE LIMA MASSANO