Angola reduces benchmark interest rate by 0.5 points to 19.5%

The central bank of Angola decided today to reduce the reference interest rate from 20% to 19.5%, arguing with the slowdown in inflation and the appreciation of the national currency, the kwanza.

“Considering the consistency of the slowdown in the evolution of prices in the national economy, particularly since the beginning of the current year, as a result of the continuous and strict control of liquidity, the appreciation of the kwanza compared to the main currencies used in transactions with abroad, and the increase in the supply of essential goods of wide consumption, the National Bank of Angola [BNA] believes that the conditions are met for the reduction of the key interest rate,” announced the financial regulator at the end of the meeting of the monetary policy committee.

At the meeting, bankers decided to “reduce the Basic Interest Rate from 20% to 19.5%, reduce the interest rate on the Permanent Liquidity Transfer Facility from 23% to 21% and keep unchanged the interest rate on the Permanent Absorption Facility at 15%.

Besides the economic environment in Angola, the decision also considered “the external context and inherent risks, given the exposure of the Angolan economy to the oil sector and the weight of imported foodstuffs in the supply basket to the domestic market,” the statement also said.

Until August, the balance of trade with foreign countries was very positive; the financial regulator added:

“The goods account recorded a surplus balance of US$23.3 billion in accumulated terms until August 2022, an increase of 78.5% compared to the same period in 2021; this positive performance reflects the 67.8% increase in the value of exports that exceeded the 49.2% growth observed in imports.”

The high price of oil compared to production costs, the budgeted at the end of last year for 2022, and the price of oil compared to last year contributed decisively to this value of the rise in export revenues.

“In the real sector, the data on employment and the climate of confidence of managers and business people, released by the National Statistics Institute (INE), referring to the second quarter of 2022, shows the consolidation of the growth of economic activity,” said the National Bank of Angola.

The regulator pointed out that “unemployment fell for the third consecutive quarter, reaching a rate of 30.2%, below that recorded in the same period last year, which was 31.6%, while the confidence of managers and businessmen in the non-financial sector regarding the evolution of the national economy in the short term was optimistic.

In August, the BNA noted, inflation continued to decelerate, reaching 19.8%, down from 21.4% in the previous month and further down from the same period a year earlier, when it registered 26.1%.

“The Monetary Policy Committee maintains the outlook for the inflation rate at the end of the current year to be below the initial forecast of 18%, moving towards the single-digit objective in the medium term,” it concluded.

With information from Lusa

More: Angola news in English, every day from The Rio Times.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error