Instruction No. 06-2017 of December 1 on Monetary Policy: Mandatory Reserves

INSTRUCTION No. 06/2017 of December 1
SUBJECT: MONETARY POLICY
" Mandatory Reserves
It being necessary to update the existing rules for calculating and complying with Mandatory Reserves to 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 No. 51 of Law No. 16/10 of July 15, the Law of the National Bank of Angola. I DETERMINE:

1. Banking Financial Institutions established in the country must maintain mandatory reserves under the terms of this Instruction.

2. The tax base for mandatory reserves, in national currency, consists of the amounts recorded according to auxiliary tables (1, 2, 4, 6, 7, 8 and 9) in the following accounts of the Chart of Accounts of Financial Institutions (CONTIF):

• 2.10.10. Demand Deposits.
• 2.10.20. Time Deposits.
• 2.10.80. Other Deposits.
• 2.20.20. Own securities sale operations with repurchase agreement.

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• 2.20.30. Third-party securities sale operations with repurchase agreement.
• 2.30.10. Securities and marketable securities issued or endorsed.
• 2.50.20.10. Obligations from pending liquidation operations.
• 2.50.20.20. Relations with correspondents.
• 2.50.20.30. Obligations for tax collection service provision.

3. The tax base for mandatory reserves, in foreign currency, consists of the amounts recorded according to auxiliary tables (1, 2, 4, 6, 7, 8 and 9) in the following accounts of the Chart of Accounts of Financial Institutions (CONTIF):

• 2.10.10. Demand Deposits.
• 2.10.20. Time Deposits.
• 2.10.80. Other Deposits.
• 2.20.20. Own securities sale operations with repurchase agreement.
• 2.20.30. Third-party securities sale operations with repurchase agreement.
• 2.30.10. Securities and marketable securities issued or endorsed.
• 2.50.20.10. Obligations from pending liquidation operations.
• 2.50.20.20. Relations with correspondents.
• 2.50.20.30. Obligations for tax collection service provision.

4. For the purposes of this Instruction, balances from Bankita accounts, demand and time deposits in national and foreign currency, and all monthly interest from the tax base defined in numbers 2 and 3 of this Instruction, are not eligible for the calculation of mandatory reserves.

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5. Eligible for compliance with mandatory reserves in national currency are the balances referring to the daily closing of the national currency demand deposit account opened at the National Bank of Angola in the name of each Banking Financial Institution.

6. Eligible for compliance with mandatory reserves in foreign currency are the following assets:
   a. 20% (Twenty percent) with balance of the foreign currency deposit account opened at the National Bank of Angola in the name of each Banking Financial Institution; b. 80% (Eighty percent) with Treasury Bonds in foreign currency belonging to the own portfolio registered in SIGMA issued from 2015 onwards.

7. The calculation of mandatory reserves and their compliance are carried out weekly, on the first business day and from the first to the last business day of the week following the constitution of the balances referred to in numbers 5 and 6, respectively.

8. The tax base defined in numbers 2 and 3 of this Instruction is subject to the following mandatory reserve coefficients:
   8.1. The mandatory reserve coefficient to be applied to the daily balances of the items composing the tax base defined in number 2 of this Instruction, excluding accounts of the Central Government, Local Governments and Municipal Administrations, is 21% (Twenty-one percent).
   8.2. The mandatory reserve coefficients to be applied to the daily balances of Central Government accounts – NC is 75% (Seventy-five percent) and to the balances of Local Governments and Municipal Administrations – NC is 50% (Fifty percent).
   8.3. The mandatory reserve coefficient to be applied to the daily balances of the items composing the tax base defined in number 3 of this Instruction, excluding accounts of the Central Government

CONTINUATION OF INSTRUCTION No. 06/2017 Page 4 of 12 and Local Governments and Municipal Administrations, is 15% (Fifteen percent).
8.4. The mandatory reserve coefficients to be applied to the daily balances of Central Government accounts – FC is 100% (One hundred percent) and to the daily balances of Local Governments and Municipal Administrations accounts – FC is 100% (One hundred percent).

9. The liability for the tax base in national currency, subject to the coefficient of 21% (Twenty-one percent), is calculated weekly, on the arithmetic mean of the balances determined in the respective accounts on business days of the week, following the following formula:

• ETn = crn {∑ [Dtn (T –1)]/N}
  Where:
• ETn = liability of week T in NC, corresponding to 21% (Twenty-one percent) on the tax base, excluding Central Government, Local Governments and Municipal Administrations accounts.
• crn = mandatory reserve coefficient corresponding to 21% (Twenty-one percent).
• T = Tth calendar week in which the compliance with mandatory reserves occurs, (T=1, 2, 3,...,52).
• T-1 = Tth calendar week in which the constitution of final daily creditor balances registered in the accounts of the tax base referred to in point 8.1 occurs, (T-1= 52, 1, 2,..., 51).
• t = business day of the week of constitution T-1.
• Dtn (T – 1) = final daily creditor balances registered in the accounts of the tax base referred to in point 8.1, reported on the first business day of the week of compliance with the liability.
• N = number of business days of week T-1.

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10. The liability for the tax base in foreign currency, subject to the coefficient of 15% (Fifteen percent), is calculated weekly, on the arithmetic mean of the balances determined in the respective accounts on business days of the week, following the following formula:

• ETe = cre {∑ [Dte (T –1)]/N}
  Where:
• ETe = liability of week T in FC corresponding to 15% (Fifteen percent) on the tax base excluding Central Government, Local Governments and Municipal Administrations accounts.
• cre = mandatory reserve coefficient corresponding to 15% (Fifteen percent).
• T = Tth calendar week in which the calculation of mandatory reserves occurs, (T=1, 2, 3,..., 52).
• T-1 = Tth calendar week in which the constitution of final daily creditor balances registered in the accounts of the tax base referred to in point 8.3 occurs, (T-1= 52, 1, 2,..., 51).
• t = business day of the week of constitution (T-1).
• Dte (T – 1) = final daily creditor balances registered in the accounts of the tax base referred to in point 8.3, reported on the first business day of the week of compliance with the liability.
• N = number of business days of week T-1.

11. For the purposes of this Instruction, business days are considered to be the days of the week, excluding Saturdays, Sundays and national holidays.

12. Up to 5% (Five percent) of the weekly arithmetic mean of final daily balances, determined in account 1.10.10 National Currency Cash of the Chart of Accounts of Financial Institutions (CONTIF), of the week of constitution, may be deducted from the liability in NC calculated under the terms of point 8.1 of this Instruction. For this purpose, the values of checks returned by the clearing service must not be computed.

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13. Furthermore, 80% (Eighty percent) of the Assets representing the value of credit disbursements in NC granted to projects in the agriculture, livestock, forestry and fisheries sectors, provided they have a maturity greater than or equal to 24 (Twenty-four) months, may also be deducted from the liability in NC calculated under the terms of point 8.1 of this Instruction.

14. The amount for the purpose of deducting the mandatory reserve, referred to in the previous paragraph, is determined based on the position of the last day of the week of constitution of the credit portfolio granted by the Banking Financial Institution registered in the Financial Institutions Supervision System of the National Bank of Angola (SSIF).

15. The effective value of the reserves to be considered for compliance with the liability in NC is equal to the sum of 75% (Seventy-five percent) of the daily balances of Central Government accounts, 50% (Fifty percent) of the daily balances of Local Governments and Municipal Administrations accounts and the amount referred to in point 8.1, deducted by the amounts established in numbers 12 and 13 according to the following formula:

• ROdn = ∑[GCdn + (GLdn) + ETn – DCTn – NMn (T-1)]
  Where:
• ROdn = effective mandatory reserves in national currency to be considered for compliance with the liability on day d.
• GCdn = 75% (Seventy-five percent) of the daily balances of Central Government accounts in NC on day d.
• GLdn = 50% (Fifty percent) of the daily balances of Local Governments and Municipal Administrations accounts in NC on day d.
• ETn = liability in week T in NC, corresponding to 21% (Twenty-one percent) on the tax base, as referred to in number 9.

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• DCTn = value corresponding to 80% (Eighty percent) on the position of the last business day of the week of constitution of the credit portfolio granted by the Banking Financial Institution to the agriculture, livestock, forestry, fisheries sectors, provided they have a maturity greater than or equal to 24 (Twenty-four) months.
• NMn (T-1) = amount up to 5% (Five percent) of the arithmetic mean of final daily balances of account 1.10.10 National Currency Cash in the week of constitution (T-1).
• d = business day of the compliance week (T).

16. The effective value of the reserves to be considered for compliance with the liability in FC is equal to the sum of the amount corresponding to 100% (One hundred percent) of the daily positions of Central Government accounts, the amount corresponding to 100% (One hundred percent) of the daily balances of Local Governments and Municipal Administrations accounts and 15% (Fifteen percent) of the weekly arithmetic mean of the balances of the Tax Base referred to in point 8.3, according to the following formula:
    ROde = ∑[GCde + GLde + ETe]
    Where:

• ROde = effective mandatory reserves in foreign currency to be considered for compliance with the liability on day d.
• GCde = 100% (One hundred percent) of the daily balances of Central Government accounts in FC on day d.
• GLde = 100% (One hundred percent) of the daily balances of Local Governments and Municipal Administrations accounts in FC on day d.
• ETe = liability in week T in FC corresponding to 15% (Fifteen percent) on the tax base, as referred to in number 10.

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• d = business day of the compliance week (T).

17. The presentation of data and information regarding the calculation of the liability, as well as of assets for its compliance in FC, must be in NC, at the average exchange rate published by the National Bank of Angola, in accordance with the provisions of CONTIF for this purpose. Meanwhile, for the compliance of mandatory reserves in FC, the average daily exchange rate published by the BNA must be considered.

18. Without prejudice to other measures that may be adopted, the National Bank of Angola must apply a sanction equivalent to the product of 1% (One percent) per month above the highest interest rate currently in force for active operations in national currency practiced by Financial Institutions during the period in question, provided for in No. 4 of Article 25 of Law No. 16/10 of July 15, the Law of the National Bank of Angola, regarding the daily insufficiency of mandatory reserves, both in national currency and in foreign currency.
    The National Bank of Angola must also apply the same penalty retroactively, for situations in which Banking Financial Institutions provide inconsistent data and information that would imply non-compliance with mandatory reserves in the respective week.

19. The collection of charges resulting from the penalties provided for in number 18 of this Instruction is carried out until the last business day of the week following the occurrence, by debit of demand deposit accounts in national currency with the National Bank of Angola, both for non-compliance in NC and for non-compliance in FC. For non-compliance in FC, the equivalence will be made through the exchange rate referred to in number 17 of this Instruction. If by the end of the deadline the amount of these penalties is not settled, the National Bank of Angola proceeds to the compulsory debit in the bank's reserve account.

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20. Banking Financial Institutions must be informed by the BNA whenever there is grounds for the sanctions provided for in number 18 of this Instruction.

21. The daily balances of the items composing the tax base defined in numbers 2 and 3 and the accounts of the Central Government and Local Governments in NC and in FC must be transmitted daily to the Payment System Department (DSP) of the BNA through the SSIF.

22. Contingency Procedures: In case of unavailability of the SSIF, Banking Financial Institutions are obliged to adopt, alternatively, the sending of data via email.

23. The data referred to in the previous number must be in conformity with CONTIF guidelines and be accurate, complete, reliable and verifiable.

24. Banking Financial Institutions are obliged to conserve and present to the representatives of the Prudential Supervision Department of Financial Institutions (DSI) of the BNA, whenever requested, the documents that allow proving the information provided for the purpose of calculating the liability.

25. Instructions No. 02/2016 of April 11 and 04/2016 of May 13, and all regulation contrary to the provisions of this Instruction, are revoked.

26. This Instruction enters into force on December 4, 2017 for the purpose of constituting the tax base, and the effective compliance with the liability must occur on December 11, 2017.

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27. Doubts in the interpretation and application of this Instruction are clarified by the Payment System Department (DSP).
    PUBLISH AND EXECUTE.
    Luanda, December 1, 2017.
    ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))THE GOVERNOR ))))))))))))))))))))))))))))))))))))))))))))))))))))))JOSÉ DE LIMA MASSANO

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ANNEX I
BANK : xxxxxxxx
CONSTITUTION PERIOD : From XX to XX (XXth) Week AUXILIARY TABLES RELATED: 1, 2, 4, 6, 7, 8 and 9 (Values in AOA) WEEK No. XX 5 days
2.10.10. DEMAND DEPOSITS 0.00
2.10.20. TIME DEPOSITS 0.00
2.10.80. OTHER DEPOSITS 0.00
2.20.20. OWN SECURITIES SALE OPERATIONS WITH REPURCHASE AGREEMENT 0.00
2.20.30. THIRD-PARTY SECURITIES SALE OPERATIONS WITH REPURCHASE AGREEMENT 0.00
2.30.10. SECURITIES AND MARKETABLE SECURITIES ISSUED OR ENDORSED 0.00
2.50.20.10. OBLIGATIONS FROM PENDING LIQUIDATION OPERATIONS 0.00
2.50.20.20. RELATIONS WITH CORRESPONDENTS 0.00
2.50.20.30. OBLIGATIONS FOR TAX COLLECTION SERVICE PROVISION 0.00
I - WEEKLY TOTAL OF THE TAX BASE 0.00
II - WEEKLY AVERAGE OF THE TAX BASE 0.00
III - TOTAL LIABILITY (according to point 9 of Instruction No. 07/2017 of December 1) 0.00 IV - WEEKLY TOTAL OF BALANCES OF ACCOUNT 1.10.10.CASH 0.00 V - WEEKLY AVERAGE OF BALANCES OF ACCOUNT 1.10.10.CASH 0.00 VI - 5% OF THE WEEKLY AVERAGE OF BALANCES OF ACCOUNT 1.10.10.CASH 0.00 VII - CREDIT RIGHTS (80% OF THE LAST DAY BALANCE OF CREDITS ACCORDING TO POINT 13 OF INSTRUCTION No. 07/2017 OF DECEMBER 1) 0.00 VIII = (III - VII) EFFECTIVE WEEKLY LIABILITY (WITHOUT GOVERNMENTS AND MUNICIPAL ADMINISTRATIONS) 0.00
2.10.10. DEMAND DEPOSITS 0.00
2.10.20. TIME DEPOSITS 0.00
2.10.80. OTHER DEPOSITS 0.00
2.20.20. OWN SECURITIES SALE OPERATIONS WITH REPURCHASE AGREEMENT 0.00
2.20.30. THIRD-PARTY SECURITIES SALE OPERATIONS WITH REPURCHASE AGREEMENT 0.00
2.30.10. SECURITIES AND MARKETABLE SECURITIES ISSUED OR ENDORSED 0.00
2.50.20.10. OBLIGATIONS FROM PENDING LIQUIDATION OPERATIONS 0.00
2.50.20.20. RELATIONS WITH CORRESPONDENTS 0.00
2.50.20.30. OBLIGATIONS FOR TAX COLLECTION SERVICE PROVISION 0.00
I - WEEKLY TOTAL OF THE TAX BASE 0.00
II - WEEKLY AVERAGE OF THE TAX BASE 0.00
III - TOTAL LIABILITY (according to point 10 of Instruction No. 07/2017 of December 1) 0.00 IV = (III) EFFECTIVE WEEKLY LIABILITY (WITHOUT GOVERNMENTS AND MUNICIPAL ADMINISTRATIONS) 0.00 STAMP AND SIGNATURE OF THE RESPONSIBLE COMPLIANCE PERIOD : From XX to XX (XXth) Week IN NATIONAL CURRENCY TAX BASE &&&&&&&&&&&&&&&&&&&&&&& - CALCULATION OF WEEKLY LIABILITY IN NATIONAL CURRENCY AND FOREIGN CURRENCY, EXCLUDING CENTRAL AND LOCAL GOVERNMENTS AND MUNICIPAL ADMINISTRATIONS IN FOREIGN CURRENCY

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ANNEX II
LIABILITY ON CENTRAL GOVERNMENT, LOCAL GOVERNMENTS (Provinces) AND MUNICIPAL ADMINISTRATIONS BANK : XXXXXXX DATE : XX-XX-2017 AUXILIARY TABLES RELATED: 1, 2, 4, 6, 7, 8 and 9 (Values in AOA) INSTITUTIONAL SECTOR
2.10.10. Demand Deposits 0.00
CENTRAL GOVERNMENT IN NC 2.10.20. Time Deposits 0.00 75% 2.10.80. Other Deposits 0.00
2.50.20.10. Obligations from Pending Liquidation Operations 0.00
TOTAL LIABILITY 0.00
2.10.10. Demand Deposits 0.00
LOCAL GOVERNMENTS AND MUNICIPAL ADMINISTRATIONS 2.10.20. Time Deposits 0.00 IN NC 50% 2.10.80. Other Deposits 0.00
2.50.20.10. Obligations from Pending Liquidation Operations 0.00
TOTAL LIABILITY 0.00
2.10.10. Demand Deposits 0.00
CENTRAL GOVERNMENT IN FC 2.10.20. Time Deposits 0.00 100% 2.10.80. Other Deposits 0.00
2.50.20.10. Obligations from Pending Liquidation Operations 0.00
TOTAL LIABILITY 0.00
2.10.10. Demand Deposits 0.00
LOCAL GOVERNMENTS AND MUNICIPAL ADMINISTRATIONS 2.10.20. Time Deposits 0.00 IN FC 100% 2.10.80. Other Deposits 0.00
2.50.20.10. Obligations from Pending Liquidation Operations 0.00
TOTAL LIABILITY 0.00
STAMP AND SIGNATURE OF THE RESPONSIBLE
COEFFICIENT BASIC ACCOUNT AMOUNT