Luanda - Angola's Net International Reserves (RIL) stood at US$13.68 billion at the end of June, a reduction of around US$1 billion compared to May.
According to the Governor of the National Bank of Angola (BNA), Manuel Tiago Dias, the value of RILs recorded last June had a degree of coverage of six months of imports of goods and services.
Speaking at a press conference, aimed to present the main decisions of the 112th ordinary meeting of the Monetary Policy Committee (MPC), held on 13 and 14 June in Luanda, the Central Bank manager also said that, in absolute terms, the balance of the goods account had gone from US$18.34 billion to US$8.6 billion.
He said that in the external sector there was a deterioration in the terms of trade, which caused the reduction of the balance of the goods account in the first quarter by 52.89%, reflecting the reduction of export revenues by 38.16%.
MPC decisions
As for the decisions taken at the 112th ordinary meeting of the MPC, the Governor of the BNA said that this body decided to keep the basic interest rate unchanged at 17 per cent, while the marginal lending rate increased from 17 per cent to 17.5 per cent.
This body, which is responsible for formulating the country's monetary and exchange rate policy, also maintained the permanent liquidity absorption facility rate at 13.5 per cent.
Tiago Dias noted that the decision taken is based on the resurgence of inflationary pressures due to changes in the macroeconomic framework, with emphasis on the reduction in export revenues and the consequent depreciation of the national currency, the Kwanza.
He added, the expectations generated around the reduction of petrol price subsidies, as well as the constraints resulting from the reorganisation of street vending, also had an impact on prices.
MPC decided to relax the mechanism of the custody fee on excess liquidity of commercial banks with the BNA, the operational of which will be the subject of specific regulations.
In the financial domain, the monetary base in national currency contracted, in cumulative monthly and year-on-year terms, by 3.62%, 5.42% and 0.96%, respectively.
The M2 monetary aggregate, in national currency, contracted by 2.36% in June, reducing the accumulated variation to 3.17% since the beginning of the year and the year-on-year variation to 6.57%.
Inflation
At the national level, according to national accounts statistics released by the National Statistics Institute (INE), the Gross Domestic Product (GDP) showed a slight growth of only 0.3 per cent in the first quarter of 2023, a percentage lower than that of the same period last year, which stood at 2.6 per cent, the source said.
According to the BNA governor, the lower-than-expected performance was mainly due to the 8% reduction in oil production, despite a 3.1% growth in the non-oil sector.
On the other hand, he recalled that monthly inflation stood at 1.41 per cent last June, with the highest variations observed in the transport class, with 2.71 per cent, health (2.08 per cent), clothing and footwear (1.53 per cent), as well as in the food and non-alcoholic beverages class, with 1.46 per cent.
In terms of contributions, he stressed that the food and non-alcoholic beverages class remains the most representative, contributing 0.85 percentage points, corresponding to 60 per cent of the observed inflation.
As a result, it recalled, year-on-year inflation stood at 11.25 per cent, an increase of 0.63 percentage points compared to the previous period.
As for the outlook, the MPC revised upwards the inflation rate forecasts to the range of 12 to 14% by the end of this year, justified essentially by the effect of the depreciation of the Kwanza.
Despite this revision, the BNA maintains the objective of achieving a single-digit inflation rate in the medium term.
The next meeting of the BNA's Monetary Policy Committee is scheduled for 14 and 15 September 2023 in Sumbe, capital of Kwanza Sul province.
World market
In the international context, the BNA Governor said that the downward trend in inflation rates in the main economies continues to be observed, as a result of the combined effort of the restrictive monetary policy stance of central banks and the reduction in energy commodity prices.
Despite the deceleration in global inflation, he said that short-term pressures still persisted, justifying the trend of rising interest rates.
He stated that the current course of monetary policy in the world's main economies has been adversely affecting economic activity, particularly in the United States and the Euro Zone, with stress to industrial production, which disrupts global economic growth projections.
In this perspective, he said, the energy commodities markets have seen a reduction in oil prices, due to weak demand.
He also said that the Organisation of the Petroleum Exporting Countries (OPEC) has decided to extend production cuts, adding the unilateral reduction declared by Saudi Arabia until the end of 2024, with a view to ensuring price stability. QCB/BA/DAN/NIC
