Confirmed Offshore Pre-salt Oil Potential Drives Angola's Plans to Auction Oil Exploration Rights to Onshore Kwanza Basin in 2013
- Language: English
- Published: July 2012
- Region: Angola
On June 20th the Banco Nacional de Angola (BNA, the central bank) raised its base interest rate and annual standing liquidity rate by 50 basis points. The base rate now stands at 9.75%, and the annual standing liquidity rate at 10.5%.
This is the second time this year that rates have been increased, and the BNA decision comes as Angola continues to struggle to stop the rapid fall in the value of the kwanza, which has been hard hit by low oil prices and the knock-on effect on government revenue. Earlier in June the BNA devalued the kwanza by 6%, taking the official rate to Kz110:US$1. This has had scant impact, however. As of June 30th the bank was selling the kwanza at Kz121.97:US$1, but the parallel market was hovering at around Kz180-200:US$1. The gap between the formal and informal markets has only added to pressure on the kwanza, and efforts by the BNA to auction more US dollars do not appear to be having much effect on bolstering the currency.
Foreign-exchange restrictions-such as withdrawal and repatriation limits-are creating difficulties for Angola-based companies, which are struggling to pay suppliers. And as well as the resurgence of empty shop shelves-a familiar sight in Angola during its long years of conflict-inflationary pressures remain strong. Inflation rose by 0.63 percentage points during May to an annual rate of 8.86%-the highest level since October 2013. This rise in inflation will be a source of concern for the government, which has expended considerable effort in lowering price growth after years of double- and at times triple-digit inflation.
Country Report Angola
Central bank raises interest rate
Impact on the forecast