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Angola holds rate and rules out devaluation of kwanza

Wednesday, November 30, 2016 13:47
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    Angola’s central bank maintained its benchmark BNA rate at 16.00 percent and said it was committed to preserve the value of the national currency, “which is why there will be no devaluation of the kwanza.”
     The National Bank of Angola (BNA), which has raised its rate by 500 basis points this year to curb inflation, said it would continue to exchange 165.8 kwanza per U.S. dollar “so there is no need for market operators to change the prices of goods and services.”
     The BNA also said it taken note of a deceleration in inflation due to its control of liquidity and an increases in the supply of goods and services.
    Angola’s inflation rate rose to 40.4 percent in October, the highest rate since July 2004, from 39.4 percent in September, continuing the upward trend since 2015.
    The fall in crude oil prices from mid-2014 has lead to a shortage of foreign exchange in Angola, undermined government revenue and hit the exchange rate of the kwanza.
    The central bank, which has devalued the kwanza several times in the last year, said commercial banks had purchased US$1.268 billion in October, a decrease of 9.24 percent.
    In October credit to the economy rose by 0.42 percent while gross credit to the central government rose 0.82 percent.
    In September the International Monetary Fund (IMF) forecast 1.25 percent output growth in 2017, up from zero growth this year, due to a recovery in the non-oil sector from higher public spending.
    Inflation was forecast to reach 45 percent by the end of the year before declining to 20 percent next year as tight monetary conditions and a stable kwanza supports disinflation.
    The IMF also said monthly inflation had started to subside and while sales of foreign exchange had helped ease pressures on the market, it added that greater exchange rate flexibility, along with supporting macroeconomic policies, would be essential to maintain the exchange rate, prevent a misallocation of resources and accelerate growth.



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