Instruction No. 1/95: Monetary Policy - Mandatory Reserves

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INSTRUCTION NO. 1/95
SUBJECT: MONETARY POLICY

• Mandatory Reserves
  . Regulation
  This Instruction defines the regime for mandatory reserves to be established in accordance with the provisions of Notice No. 01/91 issued by the Governor of the Banco Nacional de Angola, revoking Instruction No. 6/92. 1º Institutions Subject to Mandatory Reserves All financial institutions operating in the country authorized to collect deposits are subject to maintaining mandatory reserves. 2º Base for Mandatory Reserves Demand deposits, time deposits, and certified checks in national currency constitute the base for mandatory reserves, covering the following accounts in Class 3 of the Financial System Chart of Accounts:
  I – Deposits of Residents – NC
  II – Deposits of Non-Residents – NC
  IV – Certified Checks – NC
  3º- Eligible Assets for Mandatory Reserves
  Only the balances of the demand deposit account opened at the Banco Nacional de 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 Banco Nacional de Angola, and may be provided to Institutions from 12:00 hours on the next business day. 4º - Coefficient of Mandatory Reserves The coefficient for mandatory reserves is twenty percent (20%). 5º- Period for Establishment Mandatory reserves shall be required in National Currency, during the period from the 1st to the 30th of the month of their establishment.

6º - Method of Calculation of Mandatory Reserves

1. Reserve requirements are calculated as the arithmetic mean of the balances on Fridays of each month, under the headings of demand deposits, time deposits, and certified checks in NC, according to the following formula:
   ERt = a. (Σ DTt-2/N)
   Where
   ERt Reserve requirement for month “t” a Coefficient of mandatory reserves DTt-2 Position of total deposits (demand, time, and certified checks) on each Friday of month “t-2” (i.e., the second-to-last month). N Number of weekly positions summed.
2. The actual reserve value, to be considered for compliance with the requirement, shall be the arithmetic mean of the daily balances of the institution's account at the Banco Nacional de Angola, according to the following formula:
   REt = Σ DBt/N
   Where
   REt Actual reserves to be considered for compliance with the requirement.
   DBt Position of the banking institution's deposits at the Banco Nacional de Angola on each day of the month, repeating on non-business days the position of the immediately preceding business day. N Number of calendar days in the month.
3. Under no circumstances shall the balance of the Financial Institution's account at the Banco Nacional de Angola be less than 50% of the value of the mandatory reserves required, under penalty of application of the provisions set forth in Article 25, point 5 of Law 4/91.

7º- Remuneration

1. The Banco Nacional de Angola shall remunerate only the voluntary deposits of Financial Institutions. For this purpose, the positive difference between the daily balances of the bank reserve account and the respective requirement value is considered as voluntary deposits.

2. The remuneration rate shall be established periodically by the Banco Nacional de Angola.
   8º - Penalties

3. Without prejudice to other measures that may be adopted, the Banco Nacional de Angola shall charge a rate equivalent to double the highest interest rate applied in active operations, on any reserve shortfall determined at the end of each establishment period.

4. The period for applying this penalty shall equal the number of days elapsed in the period following the one in which the shortfall occurred, with the respective charges collected at the end of the new period by debit to the banking institution's reserve account.

5. The institutions concerned shall be notified by the BNA whenever penalties under the preceding paragraph 1 apply.
   9º - Information to be Sent to the Banco Nacional de Angola

6. Institutions must send to the Banco Nacional de Angola, referencing the period indicated in point 5, the attached table, duly completed.

7. The table mentioned in 1 must be sent to the Banco Nacional de Angola by the 25th day of the month preceding the month in which the requirement is to be met.

8. The aforementioned table, duly authenticated, shall be sent in a sealed envelope to the following address:
   Banco Nacional de Angola
   Emission and Credit Directorate (DEC)
   Av. 4 de Fevereiro nº.151
   LUANDA

9. In order to avoid possible delays in receiving that document, Institutions are permitted to deliver it in person to the address indicated above, or transmit it by telefax or telex whenever it cannot be prepared for postal delivery in time to meet the submission deadline. The numbers to be used for this purpose are 390579 (Telefax) and 3123 (Telex).

10. Institutions are obliged to retain and present to Banking Supervision, whenever requested, all documents that allow verification of the information contained in the table referred to in the preceding paragraph 1.-
    10º - This Instruction enters into force immediately.
    Luanda, June 23, 1995.
    THE GOVERNOR
    António Gomes Furtado