Instruction No. 19/2018, of December 3

INSTRUCTION NO. 19/2018 of December 3 SUBJECT: EXCHANGE RATE POLICY

• Foreign Currency Purchase and Sale Auctions
• Organization and Operating Procedures WHEREAS it is necessary to adjust the organization and operating procedures for foreign currency purchase and sale auctions conducted by the Bank of Angola; IN accordance with the combined provisions of Article 3 of Law No. 16/10, dated July 15, the Bank of Angola Act, and Article 70 of Law No. 12/15, dated June 17, the Framework Act for Banking Financial Institutions, and in exercise of the powers conferred upon me by Article 51 of Law No. 16/10, dated July 15, the Bank of Angola Act; I HEREBY DETERMINE:

1. Subject and Scope This Instruction establishes the rules and procedures that Banking Financial Institutions must observe in foreign currency sale and purchase auction sessions conducted by the Bank of Angola.

2. Method of Conducting Foreign Currency Sale or Purchase 2.1 The sale or purchase of foreign currency by the Bank of Angola (Bank of Angola) is conducted through electronic auctions in the Foreign Exchange Market Management System – SGMC, in accordance with the conditions and procedures set forth in this Instruction. 2.2 The Bank of Angola and the Banking Financial Institutions authorized by it participate in the auctions. 2.3 The frequency of the auctions is determined by the Bank of Angola.

3. Access Conditions for Foreign Currency Sale Sessions of the Bank of Angola 3.1 When participating in each foreign currency auction session, Banking Financial Institutions must previously ensure compliance with the legislation and regulations applicable to banking activities, particularly regarding: a) the mandatory reserve level required in national currency; b) the foreign exchange position limit; c) compliance with the minimum regulatory solvency ratio limit; d) the existence of internal control systems and procedures that ensure compliance with legal and regulatory provisions on foreign currency commercialization, including those related to anti-money laundering and counter-terrorist financing; and, e) the submission via SSIF, or in its absence by email: dcc@bna.ao, by 5:00 PM every Thursday, of the “Needs Map” containing information on foreign exchange resource requirements for operations that are ready to be effectively executed. 3.2 Banking Financial Institutions that fail to meet the above requirements or that exhibit significant deficiencies in their internal control systems shall be sanctioned under current regulations, including the prohibition of participation in future auctions.

4. Procedures for Conducting Auctions 4.1 Foreign Currency Spot Sale Auctions 4.1.1 The amount available for each auction and the denomination of foreign currency are communicated by the Bank of Angola via SGMC or another available and suitable communication means. 4.1.2 Banking Financial Institutions must submit their bids in SGMC within a maximum period of 30 (thirty) minutes after the auction opens, indicating the amounts and respective exchange rates. 4.1.3 Each Banking Financial Institution may submit up to 4 (four) bids with different exchange rates, provided that the value of each bid is not less than USD 250,000.00 (two hundred and fifty thousand US Dollars) or the equivalent in another foreign currency, consistent with the currency announced for the session. 4.1.4 The total amount of bids submitted by each Commercial Bank shall be limited to the equivalent of 15% (fifteen percent) of its regulatory own funds. 4.1.5 The total amount that Banking Financial Institutions may purchase weekly is limited to the amount reflected in their “Needs Map” submitted in the previous week. 4.1.6 Whenever Banking Financial Institutions have reached the amount referred to in the preceding point, they must refrain from participating in subsequent auction sessions until the end of the week. 4.2 Auctions for the Allocation of Credit Letter Plafonds 4.2.1. The Bank of Angola may organize specific auctions for the foreign exchange coverage of letters of credit, designated as Quantity Auctions, committing to sell foreign currency up to a pre-defined value (plafond), made available as follows: a) on the auction date, an amount to be determined at the spot exchange rate that may be used for settlement of advances or collateralization; b) up to 5 (five) days before the payment date of each shipment, the remaining amount upon presentation of documentary proof of negotiation, at the spot exchange rate. 4.2.2. Without prejudice to the procedure described in the preceding point, the Bank of Angola may assume a forward exchange rate sale commitment, in which case it must previously inform Banking Financial Institutions of the applicable terms and conditions. 4.2.3. Upon closure of the bid submission period, the Bank of Angola communicates the auction results via SGMC and/or another available and suitable communication means. 4.2.4. The plafond allocated to Banking Financial Institutions in each auction must be used for opening letters of credit within a period of up to 45 (forty-five) days, after which any unused plafond will be cancelled. 4.2.5. Forty-five (forty-five) days after each quantity auction, Banking Financial Institutions must send the Bank of Angola information regarding the utilization of allocated plafonds. 4.2.6. Banking Financial Institutions may only submit new bids in plafond allocation auction sessions if they have open letters of credit amounting to 50% of the plafond allocated in the previous quantity auction. 4.2.7. The opening and payment of letters of credit, partial or total, must be registered in SINOC and reported in SSIF. 4.3 Purchase Auctions 4.3.1. The amount and denomination of foreign currency that the Bank of Angola intends to purchase via auction are communicated via SGMC or another available and suitable communication means. 4.3.2 Banking Financial Institutions must submit their foreign currency sale bids in SGMC, indicating the amount and respective exchange rate.

5. Criteria for Selecting Submitted Bids 5.1. Bids from Banking Financial Institutions for the purchase of foreign currency by the Bank of Angola are selected in descending order of exchange rate, starting with the bid offering the highest exchange rate, until the total available amount is exhausted. 5.2. Bids for the sale of foreign currency to the Bank of Angola are selected in ascending order, starting with the bid offering the lowest exchange rate, until the total amount available from Banking Financial Institutions or sought by the Bank of Angola is exhausted. 5.3. Whenever bids with equal rates are submitted, and it is not possible to satisfy all requests in full, the available amount shall be apportioned proportionally to the amount of the submitted bid. 5.4. The total amount of bids submitted by each participating Banking Financial Institution in the auction session shall be limited to 25% of the offering placed by the Bank of Angola. 5.5. The Bank of Angola reserves the right to exclude bids deemed speculative or outside the context of equilibrium, stability, and dynamism of the foreign exchange market. 5.6. Upon closure of the bid submission period, the Bank of Angola communicates the auction results via SGMC and/or another available and suitable communication means.

6. Procedures for Settlement of Operations and Restrictions 6.1. The settlement of foreign currency purchase and sale operations is executed on D+2. 6.2. Access to rediscount operations for the purpose of settling foreign currency acquired in auction sessions is not permitted. 6.3. Whenever there is an absence or insufficiency of funds for settling the operations provided for in this Instruction, the following sanctions are applied concurrently to the non-complying Banking Financial Institution: a) cancellation of the purchased amount without coverage; b) monetary fine; c) prohibition from participating in the next 3 (Three) auction sessions.

7. Commercialization of Foreign Currency Acquired from the Bank of Angola 7.1 The foreign currency acquired under this Instruction must be obligatorily used to cover operations listed in the Needs Map submitted to the Bank of Angola, in accordance with current regulations. 7.2 Acquired currency that is not commercialized and, by the end of the day, exceeds the foreign exchange position limit, must be resold to the Bank of Angola at the prevailing BNA purchase exchange rate.

8. Other Sale Modalities and Purposes 8.1 The Bank of Angola may conduct extraordinary foreign currency purchase and sale sessions with an intervention character, defining specific participation criteria. 8.2 For the coverage of operations ordered by a sovereign body, or whenever essential goods and services supply is involved, the BNA may adopt alternative foreign currency sale modalities.

9. Doubts and Omissions Doubts and omissions arising from the interpretation and application of this Instruction are resolved by the Bank of Angola.

10. Repeal Instruction No. 01/2018, dated January 19, is hereby repealed, along with all regulations contrary to the provisions of this Instruction.

11. Entry into Force This Instruction enters into force on January 2, 2019. PUBLISHED. Luanda, December 3, 2018. THE GOVERNOR JOSÉ DE LIMA MASSANO