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2020-10-05

Directive No. 04/DMA/2020 on Requirements for the Calculation and Compliance of Mandatory Reserves

The National Bank of Angola’s Markets and Assets Department issues Directive No. 04/DMA/2020 to update the calculation and compliance framework for mandatory reserves, establishing a weekly incidence base period and distinct reserve coefficients of 22% for national currency and 17% or 100% for foreign currency depending on the account holder. The directive specifies eligible assets, including national currency demand deposits and foreign currency Treasury bonds, while granting full credit rights recognition to designated real-sector loans. Revoking prior conflicting regulations, it mandates effective compliance starting October 19, 2020, and grants the National Bank of Angola final authority over interpretive disputes.

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GOVERNOR DIRECTIVE NO. 04/DMA/2020 ORIGIN: Markets and Assets Department (DMA) DATE 06/10/2020 SUBJECT: MONETARY POLICY - Requirements for the Calculation and Compliance of Mandatory Reserves

In view of the need to update the calculation and compliance requirements for Mandatory Reserves in line with the current macroeconomic stability framework, aiming at the efficiency of monetary policy instruments, pursuant to Instruction No. 16/2020 dated October 2, 2020. This Directive establishes the following:

  1. The period for establishing the incidence base for calculating mandatory reserves in national currency (NC) and foreign currency (FC) is weekly.
  2. The mandatory reserve coefficient in NC to be applied to the daily balances of the items comprising the incidence base defined in Article 2 of Instruction No. 16/2020 dated October 2, regarding Mandatory Reserves, excluding accounts of the Central Government, Local Governments, and Municipal Administrations, is 22% (twenty-two percent).
  3. The mandatory reserve coefficients to be applied to the daily balances of Central Government accounts – NC, Local Governments and Municipal Administrations – NC is 22% (twenty-two percent).
  4. Eligible for compliance with mandatory reserves in NC are the balances corresponding to the daily closing of the national currency demand deposit account, opened at the National Bank of Angola (NBA) in the name of each Banking Financial Institution.

CONTINUATION OF DIRECTIVE NO. 04/DMA/2020 Page 2 of 3 5. The mandatory reserve coefficient in FC to be applied to the daily balances of the items comprising the incidence base defined in Article 3 of Instruction No. 16/2020 dated October 2, regarding Mandatory Reserves, excluding accounts of the Central Government and Local Governments and Municipal Administrations, is 17% (seventeen percent). 6. The mandatory reserve coefficients to be applied to the daily balances of Central Government accounts – FC, Local Governments and Municipal Administrations – FC is 100% (one hundred percent). 7. The following assets are eligible for compliance with mandatory reserves in FC: 7.1. Balance corresponding to the daily closing of national currency demand deposit accounts opened at the National Bank of Angola in the name of each Banking Financial Institution, amounting to 2% (two percent) of the average incidence base for private FC entities; 7.2. Foreign currency Treasury bonds belonging to the registered own portfolio in SIGMA, issued from 2015 onwards, up to 80% (eighty percent) of the effective liability, excluding the 2% (two percent) from the point above; 7.3. Balance of the foreign currency deposit account, opened at the National Bank of Angola in the name of each banking financial institution. 8. The credit rights item comprises: 8.1. 80% (eighty percent) of the Assets representing the value of credit disbursements in NC, granted as of the effective date of publication of this Directive, to projects in the agriculture, livestock, forestry, and fisheries sectors, provided they have a residual maturity of 24 (twenty-four) months or greater; 8.2. 100% of the credits defined in accordance with Article 6 of Notice No. 10/2020 dated April 1, regarding Credit Concession to the Real Sector of the Economy, regardless of residual maturity. 9. Directive No. 08/DMA/DRO/2019 dated October 24, and all regulations contrary to the provisions of this Directive, are hereby revoked.

CONTINUATION OF DIRECTIVE NO. 04/DMA/2020 Page 3 of 3 10. For the purpose of establishing the incidence base for calculating Mandatory Reserves, banks must consider deposits from October 12 to October 16, 2020. 11. The effective compliance with the liability referred to in the preceding paragraph shall take effect from October 19, 2020. 12. Doubts and Omissions resulting from the interpretation of this Directive are resolved by the National Bank of Angola. 13. This Directive enters into force immediately.

Luanda, October 6, 2020. MARKETS AND ASSETS DEPARTMENT

Tânia Patrícia de Oliveira Mendes Lopes -Director-

CONTINUATION OF DIRECTIVE NO. 04/DMA/2020 Page 4 of 5 ANNEX I

CONTINUATION OF DIRECTIVE NO. 04/DMA/2020 Page 5 of 5 ANNEX II

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