ADHERING TO A STRICT RESTRUCTURING PROGRAM, ANGOLA IS BRINGING DOWN INFLATION, CREATING MORE TRANSPARENCY AND LAUNCHING CENTRAL BANK BILLS

The Angolan banking and financial systems have undergone a world of change since the International Monetary Fund first presented its list of observations and laid down its very concise outline for a national economic restructuring program.
Under the program, the country’s central bank, Banco Nacional de Angola (BNA in Portuguese) has conducted an active monetary policy without central government interference which has resulted in lower inflation while meeting other financial obligations and targets.

This monetary stabilization base will allow policymakers to continue to give market forces the final say on currency exchange rates while at the same time keeping a lid on inflationary pressure.
According to IMF officials, the restructuring program has set a ceiling on net domestic assets of the banking system, which is the operative intermediate target for monetary control. That ceiling, they assert, is enforced by placing similar ceilings on the net domestic assets of individual banks.
If everything goes to plan, there will be a net increase in international reserves at the end of the year and a small withdrawal of government deposits of the banking system.

In its bid to make the nation's banking sector more transparent, policymakers at BNA have taken steps to put a clamp on tax evasions and have called in foreign tax experts to lend a hand in identifying the system's shortcomings and devising a blueprint for tax administration reforms.
However, there is still a lack of competition between commercial bank interest rates, with most staying too high despite the administration's bold move in 1998 to liberalize them. To tackle this issue, the BNA launched central bank bills earlier this year.

In turn, competitive bidding by commercial banks and private sector institutions and agents of the central bank bills has encouraged financial savings, improved the allocation of resources and has also made the commercial banks more aware of the importance of keeping the level of interest rates of loans and deposits at a higher level than the rate of inflation.
For their part, the people of Angola now realize that they can shy away from the risky business of buying and stashing away U.S. dollars and instead invest their kwanza (the national currency) savings in instruments such as the central bank bills and competitive banks because the remuneration will remain above the rate of inflation and the money will find its way back to the further development of their country and other much-needed loans.