The Monetary Policy Committee of the National Bank of Angola (CPM) met on the 20th and 21st of November 2023, in Luanda, and the following deliberations were taken:
- Increase the BNA rate to 18% (eighteen percent);
- Increase the interest rate on the Permanent Liquidity Lending Facility to 18.5% (eighteen point five percent);
- Increase the interest rate on the Permanent Liquidity Absorption Facility to 17.5% (seventeen point five percent);
- Increase the coefficient of mandatory reserves in national currency to 18% (eighteen percent);
- Eliminate the custody fee on excess free reserves of Banking Financial Institutions, deposited at the National Bank of Angola.
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The decision to increase interest rates is justified by the rising trend of inflation and is in line with the objective of a single-digit inflation rate in the medium term.
The elimination of the custody fee applicable to excess free reserves deposited by Commercial Banks at the National Bank of Angola (BNA) was due to the fact that the objective of mobilizing idle resources in the banking financial system to reinforce financial intermediation was achieved. .
With regard to the international situation , according to the recent IMF report, the prospects for a slowdown in the world economy in 2023 and 2024 remain, explained, in particular, by the performance of advanced and emerging economies. Inflation, despite its slowdown throughout 2023, remains high, a fact that forces the main Central Banks to remain cautious about reversing their restrictive stance in conducting monetary policy.
In commodity markets , average oil prices fell, due to factors linked to increased supply, highlighting the increase in Russian exports, as well as the expectation of lower demand, as a result of the maintenance of restrictive monetary policies by Central Banks and of the uncertainties surrounding the Chinese economy.
At national level, according to price statistics released by the National Statistics Institute (INE), monthly inflation in October stood at 2.15%, explained mainly by the contribution of the Food and Non-Alcoholic Beverages class (1. 42 percentage points).
The biggest price changes were seen in the Health (2.66%), Transport (2.54%), Food and Non-Alcoholic Beverages (2.42%), Clothing and Footwear (2.31%) classes.
With regard to contributions by products, 24 of the 732 products in the National Consumer Price Index (IPCN) matrix contributed 1.18 percentage points to total inflation, corresponding to 54.67%, with emphasis on granulated white sugar ( 0.15 percentage points), medium and long grain rice (0.24 percentage points), soybean oil (0.11 percentage points) and fresh or frozen horse mackerel (0.07 percentage points). In year-on-year terms, the inflation rate stood at 16.58%.
In the monetary domain , the Monetary Base in national currency, an operational variable of monetary policy, recorded an expansion of 2.29% in October. Accumulated and year-on-year variations stood at 16.96% and 22.52%, respectively. The accumulated expansion of the Monetary Base was driven, fundamentally, by the expansionist effect of the Tax Execution.
In turn, the monetary aggregate M2 in national currency, an intermediate variable of monetary policy, registered an expansion of 1.14% in October, thus increasing the accumulated expansion to 20.64% and the year-on-year expansion to 22.07%.
The stock of credit to the economy, in national currency, expanded by 1.43% in October, reaching 4.33 billion kwanzas. In accumulated terms, the expansion was 15.21% and 2.28% compared to the same period.
Along the same lines, credit to the private sector increased by 0.65% in October, reaching accumulated growth of 25.40% and 20.50% year-on-year.
In the external sector , the surplus balance of the goods account stood at 16.83 billion US dollars in the first ten months of 2023, compared to 29.16 billion US dollars recorded in the same period of the previous year , corresponding to a reduction of 42.27% (12.33 billion US dollars), reflecting the reduction in export revenues by 32.12% (13.92 billion US dollars). As a result, the supply of currency in the foreign exchange market stood at 8.43 billion US dollars, a reduction of 28.66% compared to the amount traded in the same period last year.
At the end of October, the stock of International Reserves stood at 14.24 billion US dollars, which corresponds to a degree of coverage of 7.58 months of imports of goods and services.
The inflation trajectory recommends maintaining the restrictive direction of monetary policy, with a view to aligning it with the medium-term objective, a situation that will continue to be monitored by the BNA and which may lead to the taking of additional measures, if necessary.
The next CPM meeting will take place in Luanda, on the 18th and 19th of January 2024.
Bank Of Angola