The Angolan currency, the kwanza, will have to be devalued “sooner or later” to “maintain the stability of foreign reserves,” Finance Minister Archer Mangueira said in statements made in Washington according to Angolan newspaper Valor Económico.
“This is not the best time, otherwise it could aggravate inflation,” the minister told financial news agency Bloomberg, justifying the possibility of future devaluation of the currency with the need to discourage imports, thereby promoting, “one of the government’s main objectives.”
The minister also said that the government is developing a “special programme to tackle the supply side that has to do with the negative impact that led to the shortage of foreign currency to import food products and raw materials for industry.”
The programme includes a set of measures to reduce the secondary effects of devaluation, so that the readjustment of the exchange rate is not an isolated measure.
“The government’s objective is to make the foreign exchange adjustment as soon as the programme that is being drawn up is in the application phase,” said Mangueira, without giving a timeframe.
The official exchange rate of 168 kwanzas per dollar, in place for over a year is considered administrative because it is set by the National Bank of Angola (BNA) and is not established by supply and demand fluctuations.
In order to maintain the exchange rate, the BNA sells foreign currency in primary market auctions and it is this process that affects foreign reserves. (macauhub)