AGUINALDO JAIME Governor, Banco Nacional de Angola

In an exclusive interview, Aguinaldo Jaime, the governor of Angola's central bank, Banco Nacional de Angola (BNA), discusses the latest developments in the financial sector's transition to a modern and liberalized system.

What steps have been taken so far to help speed up improvements to Angola's system?
The measures we have implemented up to now mostly have to do with liberalization. We have liberalized the exchange rate, we have liberalized the interest rate and we have also taken some other monetary measures in order to create a monetary market and an exchange rate market. We have also reduced the percentage of required reserves from 35% to 30% of which 5% can be integrated into central bank bills, which have a very attractive remuneration.

“We have liberalized the exchange rate and the interest rate.”

What about the BNA's supervision duties concerning the banking sector?
We are strengthening our supervision department because we believe there cannot be a successful liberalization process unless there is adequate monitoring, and we are doing this with the technical assistance of the Brenton & Woods institutions, the World Bank and the International Monetary Fund.

Although the IMF target of 75% inflation will not be met on time it will certainly be down to double digits and is forecast to be at 50% by the end of 2002

Previously, the BNA was also involved in commercial banking, which caused several of the commercial banks in the country to complain. How are you addressing that situation?
The central bank is no longer involved in any kind of commercial operations. This happened in the past and we are currently trying to sort it out. But I can say that we are no longer performing or contracting out any new commercial operations.

The Angolan people and especially business leaders worry about the high rate of inflation. What measures are you taking to tackle the problem?
When a country emerges from years of hyperinflation, as we are, it is impossible to eliminate it in just one shot. Inflation is still too high, but it is falling and the situation will improve by next year. The measures we are taking first of all are on the fiscal side. One of the reasons inflation is high is the fact that the state deficit was previously financed by credit from the central bank and that in turn creates inflationary pressure on the economy. Regarding the monetary side, we have created central bank bills and we are also going to take some additional measures to convince the people of Angola to save their money. The problem with the economy at the moment is that all too often Angolans put their money under their pillows or buy dollars rather than put savings into the banking system.