Angola’s international reserves have contracted by $822 million, remaining below the level recorded at the end of last year, weighed down in part by central bank financing extended to the government to cover treasury shortfalls and help fund the fiscal deficit — a practice that has become a recurring feature of recent years. By April, the National Bank of Angola (BNA) had already lent the equivalent of $1.036 billion to the state.
The BNA Law prohibits the central bank from lending to the government, but allows for an exception of up to 10% of current revenues collected in the previous year. Such loans must be fully repaid by 31 December of the same year and settled exclusively in cash. However, last year the government inserted a provision into the General State Budget (OGE) permitting repayment through five-year debt securities — an arrangement that was subsequently carried out.
Several analysts warned that this approach not only constituted a breach of the BNA Law but also undermined the central bank’s independence, which is enshrined in the Constitution. Compounding the pressure on reserves has been a decline in gold assets, which fell 7% in the first quarter to approximately 2.2 trillion kwanzas (equivalent to $2.4 billion), compared with December 2025.
The drop largely reflects the depreciation of gold, one of the main reserve assets held by the BNA. After hitting a historic high of close to $5,600 per troy ounce at the end of January, the precious metal has retreated sharply and is currently trading at around $4,000 per ounce, weighing on the overall value of reserves. It is worth noting that the International Monetary Fund (IMF) cautioned last month that while gold’s appreciation had increased its share of central banks’ international reserves in recent years, the metal carries significant limitations as a reserve asset. These include high price volatility, diversification benefits that the IMF considers limited and highly circumstantial, and low liquidity — all of which constrain its effectiveness as a core reserve holding.
Taking into account that Angola spent approximately $6 billion on imports of goods and services during the first quarter — an average of $2 billion per month — the $14.9 billion in international reserves recorded in July is sufficient to cover roughly seven months of imports, comfortably above the four-month average observed across SADC member states.
Angola currently holds $2.1 billion less in international reserves than in the pre-Covid period, when reserves stood at $17.211 billion in 2019, a time when they had reversed the downward trend that began in 2014. Even so, the all-time low was recorded in January 2022, when reserves fell to just $13.350 billion. In the opposite direction, Angola’s international reserves reached their historic peak in September 2013, when they totalled $35.188 billion.
The trajectory of Angola’s reserves underscores the ongoing fiscal pressures on the government and the central bank, with quasi-fiscal financing mechanisms and commodity price volatility continuing to shape the country’s external liquidity position.
Source: Expansão / Original article: http://expansao.co.ao/economia/detalhe/reservas-internacionais-encolhem-822-milhoes-usd-73784.html
