The commercial banks operating in Angola have to apply an interest rate equal to or lower than 7.5%, compared with the current rate of 26%, to requests for loans to the economy, with a focus on agriculture, according to a notice from the National Bank of Angola.

The central bank’s notice, presented on Tuesday to business associations, stipulates that commercial banks are also required to allocate at least 2.0% of the total value of assets recorded in the previous year’s balance sheet to lending at the rate set.

The notice quoted by Angola’s Angop news agency said that banks that do not reach the established target should justify in detail the reasons for that and refer the action plan for compliance.

If the BNA does not approve the justifications to be presented by commercial banks, it may apply fines and other penalties, as well as recommendations to ensure compliance with the established objectives.

The notice, submitted by the BNA’s director for economic and statistical studies, Pedro Casto Silva, states that banks should apply appropriate risk assessment and risk management criteria in all credit operations, as well as ensure compliance with their obligations regarding prevention of money laundering and terrorist financing.

In lending to the agricultural sector banks must also ensure that the credit risk assessment of the operations includes a detailed analysis of sector-specific risks and make use of external experts whenever there is no-one available with appropriate knowledge to allow for full and credible assessment of risks.

Silva said that the fixed interest rate will ensure the financial stability of the banks and the economic and financial viability of agricultural projects, and at the same time reduce the imports of food, as well as maintaining international reserves at levels considered to be more comfortable.

The assets of the Angolan banking system up to 31 December 2018 were estimated at 13 billion kwanzas, which means that the amount of credit available for this programme will be 260 billion kwanzas, according to the director of the National Bank of Angola. (Macauhub)