Replacing the dollar in the Angolan economy requires a solid banking system, central bank governor says

15 May 2014

A solid banking system and effective monetary policy as the basic requirements for replacing the dollar in the Angolan economy, a process that began some three years ago, the governor of he National Bank of Angola said Tuesday in Luanda.

José de Lima Massano, who was speaking at the closing session of a seminar on the challenges of replacing the dollar in the economy, organised by the central bank, noted that in March of this year the rate of inflation was the lowest recorded since the National Statistics Institute started measuring the variation of the consumer price index (CPI), and that the rate of exchange on the primary market had remained stable.

“In Angola, due to phenomena related to reduced economic and social stability seen until the end of the civil war and to the influence of the mineral sector, economic agents focused on using foreign currency and, in the case of the financial system, it actually accounted for 82 percent of deposits,” he said cited by Angolan news agency Angop.

He said that, almost of their own accord, economic agents replaced the national currency for the US dollar as a payment method, a unit of account and a store of value.

“From ten years ago until now, as a result of execution of coordinated policies put in place (…)m the economic fundaments started behaving in a way that led to macroeconomic stability, which was mainly evidenced by a drop in the rate of inflation, growth of Gross Domestic Product and net foreign reserves,” he said.

“The greater the influence of the national currency, the greater the capacity of the central bank in its role of defending the currency and protecting the financial system,” he said. (macauhub/AO)