Instruction No. 2/94: Monetary Policy - Credit Operations and Limits Regulation

INSTRUCTION NO. 2/94

Subject: MONETARY POLICY - Credit Operations/Limits Regulation Whereas it is necessary to define the methodology for controlling credit to be granted by Financial Institutions in the current year, in order to establish consistency between monetary programming and the macroeconomic targets defined in the Economic and Social Program for 1994; In the exercise of the competence provided for in Article 26, point 1, letter b, of the Organic Law of the National Bank of Angola, I HEREBY DETERMINE:
Article 1
(INSTITUTIONS SUBJECT TO CREDIT LIMITS)
All financial institutions operating in the Country are subject to the credit limits regime.

Article 2
(CONCEPT OF CREDIT SUBJECT TO CONTROL)
Whereas it is necessary to adapt the information base to the requirements for analysis and definition of monetary policy, the aggregate balance existing in each Financial Institution of the items comprising Internal Credit as stated in the "Monthly Synthetic Balance Sheet" is defined as credit whose expansion is subject to quantitative control.
Article 3
(CALCULATION OF THE CREDIT LIMIT)

1. The distribution of the quantitative limit for credit operations of financial institutions is made proportionally to the coefficient of each institution's participation in the global collection of demand and time deposits of the Financial System, with the most recent position available in the statements for calculating the mandatory reserves base prevailing.
2. The aforementioned coefficient will be applied to the credit stock established as the target for the quarter in the monetary programming, in order to indicate the credit limit of each Financial Institution, according to the following formula:

LC = p.CE, where
LC: credit limit of the institution; p: coefficient of the institution's participation in the general collection of deposits of the System; CE: credit to the economy projected for the end of the quarter.
3. Financial institutions that commence granting credits after the entry into force of the Organic Law of the National Bank of Angola will benefit from an initial limit equivalent to twice their own funds, without affecting the limits already granted to other banks.
4. Credits supported by resources of fiscal or foreign origin are exempt from the limit to be established.
5. The operational margins resulting from the gradual reduction of credit positions in the commercial area of the National Bank of Angola or from the revision or adjustment in the calculation of limits will be redistributed among the other Financial Institutions, in the proportion indicated in point 3.
6. The credit limit authorized for each institution will be communicated via a letter to be issued by the Emission and Credit Directorate of the National Bank of Angola.

7. Financial institutions may negotiate among themselves, during the first month of the respective quarter, part of the limits assigned to them, and must communicate the amount involved to the National Bank of Angola in writing within a period of 05 business days.

8. Compliance with credit limits will be determined based on the average of positions on each Friday of the last month of the quarter, according to the following formula;
   PCt = ∑ POm / N, where
   PCt: Credit position determined in the quarter; POm: Position of credit operations on each Friday of the last month of the quarter under determination; N: Quantity of weekly positions summed.
   Article 4
   (SPECIFIC INFORMATION)
   The following information shall be subject to specific disclosure, in a statement to be attached to the "Monthly Synthetic Balance Sheet:"

• "Table for Calculation of Mandatory Reserves", according to the model attached to Instruction No. 6/92, of August 12;
• "Table for Control of Credit Limits", according to the model attached to this Instruction.

Article 5
(COMPETENCIES)

1. It is the responsibility of the Directorate of Studies and Statistics to carry out the monthly monitoring of the execution of monetary programming and the definition of credit limits, proposing to higher authorities adjustment measures for better control of payment means.

2. It is the responsibility of the Directorate of Emission and Credit to directly communicate to each Financial Institution its quantitative limit for credit operations.

3. It is the responsibility of the Banking Supervision Directorate to verify the accuracy of the accounting records regarding the subject matter of this Instruction.
   Article 6
   (POSITION READJUSTMENT)

4. Without prejudice to other measures that may be adopted, should financial institutions exceed the established quarterly credit limit, they will be obliged to deposit with the Central Bank, without interest, an amount equivalent to the excess incurred, during the subsequent quarter.
   Article 7
   (FINAL PROVISIONS)

5. Instruction No. 03/91 of October 16 is hereby repealed.

6. This Instruction enters into force immediately.
   Luanda, April 22, 1994
   THE GOVERNOR
   GENEROSO HERMENEGILDO GASPAR DE ALMEIDA