Angola’s central bank said it plans to ease restrictions on commercial banks by allowing their reserves to be used to purchase higher-interest bonds to spur the economy.
Proceeds from the sale of securities will help finance infrastructure development and stimulate growth, Angolan central bank Governor Jose Pedro de Morais said on Tuesday at a business event in the capital, Luanda.
“The applications will allow the Treasury to expand the collection of resources to invest in basic infrastructure to accelerate economic diversification,” Morais said.
The slump in crude prices has forced the government of Africa’s second-largest oil producer to cut planned spending by a quarter and devalue the currency twice since June. The kwanza has lost almost a quarter of its value against the dollar this year even as the central bank has lifted its policy rate by 175 basis points since its tightening cycle began in October.
Angola is seeking "partners" for currency-exchange agreements to allow trade balances and financial operations to be paid in the local currency, said Morais, without elaborating.
On Sept. 16, the central bank raised its standing lending facility to 12.5 percent from 12 percent and its standing liquidity absorption facility to 1.75 percent from zero to “fine tune” liquidity, it said.
The reserve requirement for Angolan banks, the amount of cash they must hold, is 25 percent of local-currency deposits.