Banks urge Angola to review monetary policies

The Association of Angolan Banks (ABANC) urged the government to urgently review its monetary policies, including an increase in the reserve requirement, which they say was hurting the banking system and the economy.

The central bank raised the bank reserve requirement in May to 30% from 20%, leaving banks with less money available to loan to clients and for other operations such as investing in the foreign exchange market.

The ABANC said an increase in the reserve requirement for banks and limits on the amount of dollars sold at auctions by the central bank was reducing liquidity and could deepen the impact of the global economic crisis on Angola.

”Lower liquidity, resulting from our compliance with the recent monetary policies, is one of the biggest dangers the banking sector can be exposed to,” Jose Massano, head of ABANC, said in a letter obtained by Reuters on Tuesday.

”Therefore we appeal to the urgent revision [of these measures] as they can seriously weaken the banking system and hamper projects and programmes that impact growth and the economy’s sustainability.”

The ABANC letter, issued on April 22, was addressed to the head of the central bank Abrao Gourgel and Finance Minister Severim de Morais — both of whom are responsible for the country’s monetary policies and foreign exchange regulations.

A finance minister spokesperson said the government would look into the letter at a Cabinet meeting on Wednesday.

Shot in the foot
Massano, who represents 12 of Angola’s biggest banks, added that the government was shooting itself on the foot if it continues to limit the power of banks as lenders amid growing calls for investment in the African nation’s economy.

”We fear that by limiting the bank’s role as financial intermediators when there are calls for bigger investments and a search for solutions to counter the economic crisis, this will involuntarily contribute to deepen it’s impact,” he said.

By limiting the amount of United States dollars it sells to local banks, the central bank has left some banks struggling to satisfy growing demand for the greenback from clients eager to exchange a weakening kwanza.

The central bank has been auctioning about $30-million to banks a day, just 10% of total daily demand.

The government says the move was meant to fight rising inflation but some analysts say it was aimed at stemming speculation on the kwanza, which has slipped to more than 80 a dollar from 75 a dollar last month.

Booming sector
Angola’s banking sector has been growing at breakneck speed ever since the oil-and-diamond-producing nation emerged from an almost three-decade long civil war in 2002.

Banking deposits rose 88% to $27,7-billion in 2008 compared to the previous year and banking loans rose 135% to $14,7-billion in the same period as the country rebuilds infrastructure destroyed by the war.

An estimated 35% of Angola’s active population now hold a bank account compared to only 4% four years ago, according to Massano.

”The banking sector is therefore key for the sustainability of the real economy,” said Massano, citing the banking sector’s growing role in boosting the non-oil sector amid falling revenues from Angola’s oil exports.

Angola, dependent on oil exports for more than 90% of its income, has suffered from a drop of about $100 in the price of a barrel of oil since July last year. The nation’s foreign reserves have plunged to $13,7-billion in March from $18,9-billion in 2008. — Reuters

We make it make sense

If this story helped you navigate your world, subscribe to the M&G today for just R30 for the first three months

Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.”

Henrique Almeida
Educador Físico, amante de livros de ficção e fantasia, filmes e boardgames, teimoso de nascença

Related stories

WELCOME TO YOUR M&G

Already a subscriber? Sign in here

Advertising

Latest stories

Just transition could secure access to cleaner energy sources in...

A researcher says Africa’s huge renewable energy potential could save lives from air pollution

South African entrepreneur seeks to turn caterpillars into tasty snacks

For many people, particularly from western European backgrounds, the idea of eating insects is still riddled with fear and inhibition

No shucks given at the Knysna Oyster Festival

The world of Knysna’s shores is everyone’s oyster this week. There is something for everyone: arts; entertainment; trail running; wining and dining; and chocolate making

Plasma gangs: How South Africans’ fears about crime created an...

A tale of criminality, magic, violence and fear offered a way to foreground the contradictions that come with living in a township
Advertising

press releases

Loading latest Press Releases…
×