Regulatory Alerts2020-04-05
Instruction No. 06/2020 of April 6, Monetary Policy
The Central Bank of Angola issued Instruction No. 06/2020 to establish a Kz 100 billion liquidity line enabling small and medium-sized enterprises to convert non-adjustable treasury bonds into immediate cash. The directive mandates commercial banks to verify eligibility, process sales within specified business days, and charge a fixed 0.1% financial intermediation commission while prohibiting additional fees. Valid for 90 days or until the limit is exhausted, the policy allows the Central Bank to extend the term or increase the allocation based on market demand and justified requests.
INSTRUCTION NO. 06/2020 OF APRIL 6 SUBJECT: MONETARY POLICY − Line for the Purchase of Treasury Bonds Following the declaration of the State of Emergency, decreed through Presidential Decree No. 82/20 of March 26, the Central Bank of Angola deemed it appropriate to implement measures allowing small and medium-sized enterprises (SMEs) to convert certain Treasury Bonds in their balance sheets into immediate liquidity, thereby facilitating their treasury management during this period of reduced activity; Therefore, under Article 22 of Law 16/10 of July 15, the Central Bank of Angola Act, and in exercise of the competence conferred upon me by Article 40 of the same Law; I HEREBY DETERMINE:
- Line for the Purchase of Treasury Bonds The Central Bank of Angola provides a line for the purchase of Non-Adjustable Treasury Bonds (NTBs) to small and medium-sized enterprises, under the terms and conditions defined in Annex I of this Instruction, which forms an integral part thereof.
- Interpretation and Omissions Any doubts or omissions arising from the interpretation of this Instruction shall be resolved by the Asset Markets Department of the Central Bank of Angola.
CONTINUATION OF INSTRUCTION NO. 06/2020 Page 2 of 4 3. Sanctions Violation of the provisions set forth in this Instruction subjects banks to penalties, in accordance with the Financial Institutions Framework Law. 4. Term of Validity This Instruction shall remain in force for a period of 90 days from the date of its publication or until the limit of the line for the purchase of Treasury Bonds is exhausted, with the term being extendable by the Central Bank of Angola, as defined in Annex I. 5. Entry into Force This Instruction enters into force on the date of its publication. PUBLISHED. Luanda, April 6, 2020 THE GOVERNOR JOSÉ DE LIMA MASSANO
CONTINUATION OF INSTRUCTION NO. 06/2020 Page 3 of 4 ANNEX I Line for the Purchase of Treasury Bonds to non-financial sector enterprises Terms & Conditions Amount: Kz 100 Billion Purpose Purchase of Non-Adjustable Treasury Bonds (NTBs) with the objective of generating liquidity for enterprises Line Utilization Period The line shall be available until the earliest of: − 3 months from the date of publication of the terms and conditions, − full utilization of the available amount. The Central Bank of Angola may extend the utilization period, if justified. Eligible Enterprises Active small and medium-sized enterprises holding NTBs that meet the eligibility conditions. Eligible Securities − Non-Adjustable Treasury Bonds (NTBs) − Year of issuance: 2019 or 2020 − Remaining maturity: up to 4 years − That have not been pledged as collateral for a credit facility granted by a commercial bank. Maximum Amount per Enterprise 1 Billion Kwanzas Trading Conditions The Central Bank of Angola will acquire the NTBs at par provided that the yield to maturity is equal to or greater than 18%, or, if not, at a discount to ensure a minimum yield to maturity of 18%. Access Procedures
- Enterprises must express their interest in selling their NTBs under the trading conditions mentioned above to their commercial bank, which holds custody of the relevant securities.
CONTINUATION OF INSTRUCTION NO. 06/2020 Page 4 of 4 2. Commercial banks must: a. verify that the enterprise and the NTBs it intends to sell meet the eligibility criteria outlined above; b. within 1 business day of receiving the customer's expression of interest, and upon verifying eligibility, send information to the Central Bank of Angola enabling verification of compliance with eligibility requirements. 3. The Central Bank of Angola evaluates the request and responds to the commercial bank regarding its acceptance or rejection of the purchase of the securities, confirming the amount to be paid. 4. The commercial bank confirms the conditions to its customer and executes the sale, within two business days, transferring the NTBs to the Central Bank of Angola, which transfers the funds to the credit of the customer's bank account. 5. Commercial banks are prohibited from charging their customers any other commissions in addition to the financial intermediation commission defined below.