Instruction No. 05/1998, dated April 28

INSTRUCTION NO. 05/98
SUBJECT: MONETARY POLICY

• Mandatory Reserves
  . Regulation
  This instruction defines the regime of Mandatory Reserves to be established in accordance with the provisions set forth in Notice No. 01/97, dated February 26, issued by the Government of the National Bank of Angola.
  ARTICLE 1
  All financial institutions operating in the Country, authorized to collect deposits, are subject to maintaining mandatory reserves.
  ARTICLE 2
  The basis for the application of mandatory reserves comprises current deposits, time deposits, and certified checks in national currency (MN), covering the following accounts of class 3 of the Financial System Chart of Accounts:
  I - Deposits by Residents - MN
  II - Deposits by Non-Residents - MN
  IV - Certified Checks - MN
  ARTICLE 3
  Only the balances of the current deposit account opened at the National Bank of Angola, in the name of each institution, relating to the daily closing balances are eligible for the establishment of mandatory reserves. The aforementioned balances are those recorded in the accounting records of the National Bank of Angola, and may be provided to institutions from 12:00 hours on the following business day.
  ARTICLE 4
  The coefficient for mandatory reserves is thirty-five percent (35%) for current deposits - MN and certified checks - MN, and ten percent (10%) for time deposits - MN.

ARTICLE 5
Mandatory reserves shall be payable in national currency, from the first to the last day of the fortnight of their establishment.
ARTICLE 6

1. The reserve requirement is calculated fortnightly, based on the arithmetic mean of the balances on Fridays of each period, under the categories of current deposits, time deposits, and certified checks in MN, according to the following formula:
   ERt=a (ΣDTt-2/N)
   Where
   ERt = Reserve requirement for the fortnight "t"; a = mandatory reserve coefficient; DTt-2 = Total deposit position (current, time and certified checks) on each Friday of the fortnight prior to the one in which the requirement is fulfilled; and N = number of weekly positions summed.

2. The effective value of the reserves, to be considered for compliance with the requirement, shall be the arithmetic mean of the daily balances of the financial institution's account at the National Bank of Angola, according to the following formula:
   REt = ΣDBt/N in which
   REt = Effective reserves to be considered for compliance with the requirement; DBt = Deposit position of the financial institution at the National Bank of Angola, on each business day of the period. In case a non-National holiday occurs, Provincial Delegations located in areas celebrating a regional holiday shall repeat the balance of the last business day. N = Number of business days in the period for fulfilling the requirement (days in the period minus Saturdays, Sundays and National holidays)

3. Under no circumstances shall the balance of a financial institution's account be less than fifty percent (50%) of the value of the mandatory reserves required, under penalty of application of the provisions set forth in Article 27°, point 5, of Law No. 6/97 dated July 11, as specified in Article 8°.
   ARTICLE 7

4. The National Bank of Angola shall remunerate only the amount corresponding to voluntary deposits by each financial institution. For this purpose, a voluntary deposit is considered as the positive difference between the average of daily balances of the bank reserve account, considering only business days, and the respective requirement value, to determine the amount on which remuneration is due, which shall be calculated, meanwhile, for the calendar days of the occurrence period.

5. The remuneration rate shall be periodically established by the National Bank of Angola.
   ARTICLE 8
   Without prejudice to other measures that may be adopted, the National Bank of Angola shall charge a rate equivalent to one and one-quarter (1 ¼ ) times the highest rate practiced in active operations during the period in which insufficiency occurs, on:

6. reserve insufficiency determined at the end of each establishment period and/or;

7. daily value that falls below the minimum balance established for institution accounts at the NBA.

8. The incidence period of these penalties shall be equal to the number of days elapsed in the period, if the insufficiency is determined by the average, or by the number of days in which the balance falls below the permitted minimum, with the respective charges being collected on the last business day of the month following the occurrence, by debit to the Bank Reserve account of the banking institution.

9. The affected institutions shall be notified by the NBA whenever there is grounds for penalties provided in the preceding point.
   ARTICLE 9
   Financial institutions must send to the National Bank of Angola, with reference to the period indicated in Article 5°, the attached table duly completed, accompanied by a computer-readable medium recording, which shall be returned to the financial institution.

10. The table mentioned in 1 must be sent to the National Bank of Angola, within the following timeframes:
    Table for the 1st fortnight of the base month: delivered by day 25 of that same month; and
    Table for the 2nd fortnight of the base month: delivered by day 10 of the following month.

11. The aforementioned table, duly authenticated, shall be delivered at the following address:
    National Bank of Angola
    Emission and Credit Directorate (DEC)
    4 de Fevereiro Avenue No. 151 Luanda

12. Financial institutions are obliged to retain and present, upon request by the representatives of the Banking Supervision of the National Bank of Angola, all documents that allow verification of the information contained in the table referred to in point I above.
    ARTICLE 10

Notice No. 1/97 dated March 3 is hereby revoked
ARTICLE 11
This instruction enters into force immediately Luanda, April 28, 1998.- THE GOVERNOR SEBASTIÃO BASTOS LAVRADOR