Regulatory Alerts1994-04-20
Instruction No. 6/94: Exchange Rate Policy - Floating Exchange Rate Regime and Accounting of Operations
The National Bank of Angola issues Instruction No. 6/94 to mandate the monthly adjustment of foreign currency balances for financial institutions using Central Bank rates for trial balances and financial statements. The directive specifies that exchange rate differences must be posted as debits or credits to equity accounts to align national currency valuations with converted foreign currency balances, with corresponding entries recorded in designated revenue or expense accounts. Additionally, it authorizes operating financial institutions to centralize exchange operation accounting at the national or regional level, requiring daily branch movements to be incorporated into the central entity's books on the same day they occur.
INSTRUCTION NO. 6/94 Subject: EXCHANGE RATE POLICY
- Floating Exchange Rate Regime
- Accounting of Operations Through Instruction No. 4/94, dated April, the methodology for exchange operations in the two-tier banking system was established, within the framework of the new floating exchange rate regime; In the same vein, through Instruction No. 5/94, dated April 22, the procedures to be observed for determining the exchange position of operating Financial Institutions were established; Since it is necessary to clarify the procedures regarding the accounting of said operations and the determination of the respective results, In the exercise of the competence attributed by Article 42 of the Organic Law of the National Bank of Angola, -
I HEREBY DETERMINE: Article 1 Monthly, for the valuation in national currency of the rights and obligations of Financial Institutions in foreign currency, the balances of the respective accounts must be adjusted, based on the rates provided by the Central Bank for the purposes of trial balances and financial statements. Article 2 For the purposes of the preceding article, it must be observed that: a) the result of the operations shall be considered the amount necessary to be posted as a debit or credit to the equity account, so that its balance in national currency corresponds, in nature (debtor or creditor) and value, to the foreign currency balance recorded therein converted at the rate mentioned in the preceding point; b) the determined results must be accounted for in their respective accounts in counterpart with the appropriate revenue or expense items.
Article 3
- The accounting bookkeeping of exchange operations may be carried out in a centralized manner, at the national or regional level, at the discretion of the operating Financial Institution, in one or more branches.
- The daily movements of centralized branches must be incorporated into the accounting of the centralizing entity to which they are subordinate, on the same date they occur, with postings backdated due to the impossibility of incorporating the movement on the same day not being permitted. Article 4 This Instruction enters into force immediately. Luanda, April 22, 1994 THE GOVERNOR GENEROSO HERMENEGILDO GASPAR DE ALMEIDA