Instruction No. 02/2021 of February 10

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INSTRUCTION NO. 02/2021 of February 10
ASSUNTO: FINANCIAL SYSTEM

• Mandatory Reserves

Given the need to update existing rules for determining and fulfilling mandatory reserves in light of the current macroeconomic stability framework, with a view to greater efficiency of monetary policy instruments; In the exercise of the powers conferred upon me by Article 51 of Law No. 16/10, dated July 15, the Bank of Angola Law. I DETERMINE:

1. Banking Financial Institutions under the supervision of the Bank of Angola must maintain mandatory reserves in accordance with this Instruction.
2. The incidence base for mandatory reserves, in national currency, consists of 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 CHART OF ACCOUNTS - CONTIF ADJ):

• 2.10.10. Demand Deposits;
• 2.10.20. Time Deposits;
• 2.10.80. Other Deposits;
• 2.10.90. Other Loans;
• 2.20.20. Sale of Own Securities with Repurchase Agreement;
• 2.20.30. Sale of Third-Party Securities with Repurchase Agreement;

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• 2.30.10. Issued or Endorsed Securities and Financial Instruments;
• 2.50.20.10. Obligations from Pending Settlement Operations; and,
• 2.50.20.30. Obligations from Tax Collection Services.

3. The incidence base for mandatory reserves, in foreign currency, consists of 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 CHART OF ACCOUNTS - CONTIF ADJ):

• 2.10.10. Demand Deposits;
• 2.10.20. Time Deposits;
• 2.10.80. Other Deposits;
• 2.10.90. Other Loans;
• 2.20.20. Sale of Own Securities with Repurchase Agreement;
• 2.20.30. Sale of Third-Party Securities with Repurchase Agreement;
• 2.30.10. Issued or Endorsed Securities and Financial Instruments;
• 2.50.20.10. Obligations from Pending Settlement Operations;
• 2.50.20.20. Correspondent Relations; and,
• 2.50.20.30. Obligations from Tax Collection Services.

4. For the purposes of this Instruction, balances in Bankita accounts, both demand and time deposits, in national and foreign currency, as well as all monthly interest on the incidence base defined in paragraphs 2 and 3 of this Instruction, are not eligible for calculating mandatory reserves.
5. Assets defined in specific regulations are eligible for fulfilling mandatory reserves in national currency (NC) and foreign currency (FC).
6. The calculation of mandatory reserves is performed on a weekly basis on the first business day of the week following the establishment of the balances referred to in paragraphs 2 and 3 of this Instruction.
7. The fulfillment of the calculated mandatory reserves is carried out on a daily basis from the first to the last business day of the week following the establishment of the balances referred to in paragraphs 2 and 3 of this Instruction.
8. The incidence base defined in paragraphs 2 and 3 is subject to mandatory reserve coefficients, as established in specific regulations.
9. The liability for the incidence base in national currency, subject to the mandatory reserve coefficient as established in specific regulations, is calculated on a weekly basis based on the arithmetic mean of balances determined in the respective accounts on business days during the period, according to the following formula:

• ETn = crn {∑ [Dtn (T –1)]/N}
  Where:
• ETn = liability for period T in NC, corresponding to the percentage established in specific regulations on the incidence 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 the fulfillment of mandatory reserves occurs, (T=1, 2, 3,...,n);
• T-1 = T-th calendar period in which the final daily debtor balances are established, recorded in the incidence base accounts referred to in paragraph 2 of this Instruction, excluding Central Government and Local Governments/Municipal Administrations accounts, (T-1=-n, 1, 2,..., n-1);
• t = business day of the establishment period T-1;

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• Dtn (T – 1) = final daily debtor balances recorded in the incidence base accounts referred to in paragraph 2 of this Instruction, excluding Central Government and Local Governments/Municipal Administrations accounts, reported on the first business day of the liability fulfillment period; and
• N = number of business days in period T-1.

10. The liability for the incidence base in foreign currency (FC), subject to the coefficient as established in specific regulations, is calculated on a weekly basis based on the arithmetic mean of balances determined in the respective accounts on business days during the period, according to the following formula:

• ETe = cre {∑ [Dte (T –1)]/N}
  Where:
• ETe = liability for period T in FC on the incidence base, as established in specific regulations, excluding Central Government and Local Governments/Municipal Administrations accounts;
• 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-1 = T-th calendar period in which the final daily debtor balances are established, recorded in the incidence base accounts referred to in paragraph 3 of this Instruction, (T-1= -n, 1, 2, ..., n-1);
• t = business day of the establishment period (T-1);
• Dte (T – 1) = final daily debtor balances recorded in the incidence base accounts referred to in paragraph 3 of this Instruction, reported on the first business day of the liability fulfillment period; and
• N = number of business days in period T-1.

11. For the purposes of this Instruction, business days are considered to be the days in the period, excluding Saturdays, Sundays and national holidays.
12. Credit rights may be deducted from the NC liability, calculated in accordance with paragraph 2 of this Instruction, as per specific regulations.
13. The amount for the deduction of mandatory reserves referred to in the preceding paragraph is determined based on the position on the last day of the credit portfolio establishment period, granted by the Banking Financial Institution and recorded in the Supervision System of Financial Institutions (SSIF) of the Bank of Angola.
14. The effective reserve amount to be considered for fulfilling the NC liability is equal to the sum of the weekly average of Central Government, Local Governments and Municipal Administration accounts and the amount referred to in paragraph 9 of this Instruction, weighted according to coefficients established in specific regulations, minus the amounts established in paragraphs 12 and 13 of this Instruction, according to the following formula:

• ROdn = ∑[GCTn+ (GLTn) + ETn – DCTn(T-1)]
  Where:
• ROdn = effective mandatory reserves in NC to be considered for fulfilling the liability on day d;
• GCTn = Weekly Average of Central Government accounts in NC in T-1, weighted according to specific regulations;
• GLTn = Weekly Average of Local Governments and Municipal Administration accounts in NC in T-1, weighted according to specific regulations;
• ETn = liability for period T in NC, corresponding to the coefficient established in specific regulations on the incidence base, as referred to in paragraph 9 of this Instruction;
• DCTn = value corresponding to credit rights, as per specific regulations; and
• d = business day of the fulfillment period (T).

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15. The effective reserve amount to be considered for fulfilling the FC liability is equal to the sum of daily balances of Central Government, Local Governments and Municipal Administration accounts and the amount referred to in paragraph 10 of this Instruction, weighted according to coefficients established in specific regulations, according to the following formula:

• ROde = ∑[GCde+ GLde+ ETe]
  Where:
• ROde = effective mandatory reserves in FC to be considered for fulfilling the liability on day d;
• GCde = daily balances of Central Government accounts in FC on day d, weighted according to specific regulations;
• GLde = daily balances of Local Governments and Municipal Administration accounts 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 on the incidence base, as referred to in paragraph 10 of this Instruction; and
• d = business day of the fulfillment period (T).

16. The submission of data and information regarding the calculation of liability, as well as assets for its fulfillment in FC, must be in NC, at the market exchange rate (Bloomberg BGN) of the previous day's close, with the same applying to the fulfillment of mandatory reserves in FC.
17. Without prejudice to other measures that may be adopted, the 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 Financial Institutions during the relevant period, as provided for in paragraph 4 of Article 25 of Law No. 16/10, dated July 15, the Bank of Angola Law, on daily shortfalls in mandatory reserves, both in national and foreign currency.

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18. The collection of charges resulting from the penalties provided for in paragraph 17 of this Instruction is carried out by the last business day of the week following the occurrence, via debit in national currency Liquidation accounts held at the Bank of Angola, for both NC and FC non-compliances.
19. For FC non-compliances, equivalence will be made using the exchange rate referred to in paragraph 16 of this Instruction.
20. If the amount of said penalties is not settled by the end of the stipulated period, the Bank of Angola proceeds with compulsory debit in the reserve account of the respective Bank.
21. Banking Financial Institutions must be notified by the BNA whenever sanctions provided for in paragraph 18 of this Instruction apply.
22. Daily balances of the items comprising the incidence base defined in paragraphs 2 and 3 of this Instruction, as well as Central Government and Local Governments/Municipal Administration accounts in NC and FC, must be transmitted daily to the Asset Markets Department (DMA) of the Bank of Angola via the SSIF.
23. Procedures and Contingency: in case of SSIF unavailability, Banking Financial Institutions are obliged to alternatively submit data via email.
24. The data referred to in the preceding paragraph must comply with CONTIF ADJ guidelines and be accurate, complete, reliable and verifiable.
25. Banking Financial Institutions are obliged to retain and present, upon request, documents to the representatives of the Banking Supervision Department (DSB) of the Bank of Angola that allow verification of the information provided for calculating liability.
26. The period for establishing the incidence base and effective fulfillment is defined in specific regulations.
27. Doubts and omissions arising from the interpretation of this Instruction are resolved by the Bank of Angola.

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28. Non-compliance with the provisions of this Instruction constitutes an offense punishable under Law No. 12/15, dated June 17, the Framework Law of Financial Institutions.
29. Instruction No. 16/2020, dated October 2, and any other regulations contrary to the provisions of this Instruction are hereby revoked.
30. This Instruction enters into force on the date of its publication.
PUBLISHED.
Luanda, February 10, 2021.
THE GOVERNOR
JOSÉ DE LIMA MASSANO