Agreement between Angola and IMF to make it possible to regulate the money market, World Bank says

5 October 2009

Luanda, Angola, 5 Oct – The agreement between Angola and the International Monetary Fund (IMF) is of greater importance than a mere injection of currency as it will make it possible to regulate operations in the money market, the World Bank said Thursday in Luanda.

“The success of negotiations shows the decision of the Luanda authorities to adopt a set of macroeconomic policies (in the short and medium term) designed to preserve macroeconomic stability and strengthen policy management, ensuring sustainable economic growth,” said the World Bank monthly round up in Luanda.

“Although the influx of foreign currency permitted by such a programme is significant to support the balance of payments and international reserves, the shock of positive credibility is even more important,” it said.

Negotiations were practically concluded during the last round of meetings of the IMF with the Angolan authorities (22-30 September) in Luanda.

The programme which is aimed at supporting the authorities in their stabilising efforts, will have to undergo a referendum next month by the IMF board.

It is expected to relieve immediate liquidity pressures, stimulate market confidence and recover a sustainable macroeconomic position, the IMF said.

The World Bank has said that if the current trend continues, the National Bank of Angola would be able once again to provide banks with “large amounts of dollars in a systematic and consistent way and (currency) auctions could return with a limited risk of string de-valuation of the kwanza.”

The National Bank of Angola is currently selling limited quantities of dollars at a fixed rate, using a formula to allocate them to retail banks, which results in an accumulation of demand, which can only be met when more foreign currency is available. (macauhub)