International reserves managed by the National Bank of Angola (BNA) fell by 2% to $15.5 billion in May, down from $15.9 billion in December, representing a decrease of $395 million, according to calculations by Expansão based on daily data released by the central bank.
The decline in reserves is partly explained by loans granted by the BNA to the government to cover cash flow needs and help finance the budget deficit, a practice that has been repeated in recent years. Just to give an idea, by April, the central bank had already lent the government the equivalent of USD 1,036.7 million. The BNA law prohibits the central bank from lending money to the government, but allows an exception up to a limit of 10% of the previous year’s current revenues.
However, these loans must be fully repaid by December 31 of the same year and must be paid in cash. But last year, the government included in the State Budget Law the option to make the payment in five-year debt securities, which came to pass, with several experts warning that this not only constituted a violation of the central bank law but also undermined its independence enshrined in the Constitution.
International reserves consist of foreign assets held by the central bank, including currencies such as dollars and euros, monetary gold, and sovereign debt securities issued by other countries. These assets play a central role in macroeconomic stability, serving as a safety net to weather external shocks, finance balance of payments imbalances, and support exchange rate stability.
Given that Angola spent approximately USD 6.0 billion on imports of goods and services during the first quarter of the year—equivalent to a monthly average of USD 2.0 billion—the USD 15.5 billion in international reserves recorded in May is sufficient to cover up to eight months of imports, exceeding the four-month average among SADC countries. Angola currently has USD 1.7 billion less in international reserves than it did in the pre-COVID-19 period.
Source: Expansão
