Instruction No. 06/2024 of June 12 on Financial System - Mandatory Reserves

INSTRUCTION NO. 06/2024 of June 12 SUBJECT: FINANCIAL SYSTEM

• Mandatory Reserves

Whereas there is a need to update the existing rules for calculating and complying with mandatory reserves; In exercise of the powers conferred upon me by Article 54 of Law No. 24/21, dated October 18, the Law of the National Bank of Angola. I DETERMINE:

1. Banking Financial Institutions under the supervision of the National Bank of Angola must maintain mandatory reserves in accordance with this Instruction.

2. The tax 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.

3. The tax 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.

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.

5. Assets defined in specific regulations are eligible for compliance with mandatory reserves in national currency (NC) and foreign currency (FC).

6. The calculation of mandatory reserves is performed on a monthly basis on the first business day of the month following the establishment of the balances referred to in numbers 2 and 3 of this Instruction.

7. Compliance with the calculated mandatory reserves is performed on a monthly average basis from the first to the last business day of the month following the calculation of the balances referred to in numbers 2 and 3 of this Instruction.

8. The tax base defined in numbers 2 and 3 of this Instruction is subject to mandatory reserve coefficients, as established in specific regulations.

9. The liability for the tax base in national currency, subject to the mandatory reserve coefficient as established in specific regulations, is calculated on a monthly basis over the arithmetic mean of balances determined in the respective accounts on business days of the period, following the following formula: • • ETn = crn {∑ [Dtn (T –2)]/N} Where: • • ETn = liability for period T in NC, as established in specific regulations regarding the tax 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-2 = T-th calendar period in which the final daily credit balances are established, recorded in the accounts of the tax base referred to in number 2 of this Instruction, excluding accounts of the Central Government and Local Governments and Municipal Administrations, (T-2 = -n, 1, 2,..., n-1); • • Dtn (T – 2) = final daily credit balances recorded in the accounts of the tax base referred to in number 2 of this Instruction, excluding accounts of the Central Government and Local Governments and Municipal Administrations, reported on the first business day of the compliance period; and, • • N = number of business days in period T-2.

10. The liability for the tax base in foreign currency (FC), subject to the coefficient as established in specific regulations, is calculated on a monthly basis over the arithmetic mean of balances determined in the respective accounts on business days of the period, following the following formula: • • ETe = cre {∑[Dte(T–2)]/N} Where: • • ETe = liability for period T in FC regarding the tax 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-2 = T-th calendar period in which the final daily credit balances are established, recorded in the accounts of the tax base referred to in number 3 of this Instruction, (T-2 = -n, 1, 2, ..., n-1); • • Dte (T – 2) = final daily credit balances, recorded in the accounts of the tax base referred to in number 3 of this Instruction, reported on the first business day of the compliance period; and, • • N = number of business days in period T-2.

11. For the purposes of this Instruction, business days are considered to be the days of the period, excluding Saturdays, Sundays and national holidays.

12. Credit rights may be deducted from the liability in NC, calculated in accordance with number 2 of this Instruction, as per specific regulations.

13. The effective reserve value to be considered for compliance with the liability in NC is equal to the sum of the daily balances of accounts of Local Governments and Municipal Administrations and the amount referred to in number 2 of this Instruction, weighted according to coefficients established in specific regulations, minus the amounts established in numbers 12 and 13 of this Instruction, according to the following formula: • • ROdn = ∑[(GLTn) + ETn – DCTn(T-1)] Where: • • ROdn = effective mandatory reserves in NC to be considered for compliance with the liability on day d; • • GLTn = Monthly Average of accounts of Local Governments and Municipal Administrations in NC in T-2, weighted according to specific regulations; • • ETn = liability for period T in NC, corresponding to the coefficient established in specific regulations regarding the tax base, as referred to in number 9 of this Instruction; • • DCTn = value corresponding to credit rights, as per specific regulations; and, • • d = business day of the compliance period (T).

14. The effective reserve value to be considered for compliance with the liability in FC is equal to the sum of the balances of accounts of Local Governments and Municipal Administrations and the amount referred to in number 3 of this Instruction, weighted according to coefficients established in specific regulations, according to the following formula:

15. • • ROde = ∑[GLde + ETe] Where: • • ROde = effective mandatory reserves in FC to be considered for compliance with the liability on day d; • • GLde = daily balances of accounts of Local Governments and Municipal Administrations in FC on day d, weighted according to specific regulations; • • ETe = liability for period T in FC, corresponding to the coefficient established in specific regulations regarding the tax base, as referred to in number 10 of this Instruction; and, • • d = business day of the compliance period (T).

16. The submission of data and information regarding the calculation of liability, as well as assets for its compliance in FC, must be in NC, at the primary market exchange rate (Bloomberg BGN average buy price), of the close of the previous day, and the same applies to compliance with mandatory reserves in FC.

17. Without prejudice to other measures that may be adopted, the National Bank of 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 the National Bank of Angola during the relevant period, as provided for in number 4 of Article 25 of Law No. 24/21, dated October 18, the Law of the National Bank of Angola, on shortfalls in mandatory reserves, both in national and foreign currency, according to specific regulations.

18. The collection of charges resulting from the penalties provided for in number 16 of this Instruction is carried out until the last business day of the month following the occurrence, by debit in National Currency Settlement accounts held at the National Bank of Angola, for both non-compliance in NC and non-compliance in FC.

19. For non-compliance in FC, equivalence will be made using the exchange rate referred to in number 15 of this Instruction.

20. If the amount of said penalties is not settled by the end of the stipulated period, the National Bank of Angola proceeds with compulsory debit in the reserve account of the respective Bank.

21. Banking Financial Institutions must be notified by the National Bank of Angola whenever sanctions provided for in number 16 of this Instruction apply.

22. The daily balances of the items comprising the tax base defined in numbers 2 and 3 of this Instruction, as well as accounts of the Central Government and Local Governments and Municipal Administrations in NC and FC, must be transmitted daily to the Markets Department (DME) of the National Bank of Angola through the SSIF.

23. Procedures and Contingency: in case of unavailability of the SSIF, Banking Financial Institutions are required to alternatively submit data via email.

24. The data referred to in the preceding number must be in accordance with ADJUSTED CONTIF guidelines and must be accurate, complete, reliable and verifiable.

25. Banking Financial Institutions are required to retain and present, upon request by representatives of the Banking Supervision Department (DSB) of the National Bank of Angola, documents that allow verifying the information provided for the purpose of calculating liability.

26. The period for establishing the tax base and effective compliance is defined in specific regulations.

27. Doubts and omissions resulting from the interpretation of this Instruction are resolved by the National Bank of Angola.

28. Non-compliance with the provisions of this Instruction constitutes an offence punishable under Law No. 14/21, dated May 19, the General Regime Law for Financial Institutions.

29. Instruction No. 04/2023, dated March 30, and any other regulations conflicting with the provisions of this Instruction are hereby revoked.

30. This Instruction enters into force on the day following its publication. PUBLISHED. Luanda, June 12, 2024. THE GOVERNOR MANUEL ANTÓNIO TIAGO DIAS