Background to operations
BACKGROUND TO OPERATIONS IN ANGOLA
1) Source: Ministry of Finance; State Budget for 2010.
Report | Background to operations 35 products and goods consumed in Angola are imported
and await through flow mostly via this port) and the precarious state of other communication and connection resources to the supply markets head the list of factors which impede a more meaningful deceleration in inflation.
In 2009, added to these factors were others of an economic nature, notably, the currency depreciation against the Dollar and, in particular against the Euro (from whose economic region some 30% of Angola’s imports are sourced), as well as the rise in the price of agricultural produce in the international markets (given that these goods represent around 50% in the price basket and are mostly imported).
Loans
The behaviour of the loan aggregates in 2009 presented two distinct phases. In the first three quarters, domestic loans presented a downward trajectory in the pace of growth, explained by the uncertainty surrounding the direction of economic activity and by the increased restrictiveness of monetary policy. In February, the Banco Nacional de Angola (BNA) raised the cash reserves coefficient from 15% to 20% and in April yet again hiked it to 30%. However, in May it made possible the remuneration of cash reserves by authorising as being eligible for their constitution (up to 1/3 of the total) debt issued by the State and instruments of the BNA’s monetary policy, thereby alleviating the cost incurred by banks stemming from the immobilisation of deposits.
In the last quarter, the world economy’s stabilisation, the return of the oil price to above 50 US$ / barrel, and the upswing in domestic confidence justified the reversal in the previous trend, with lending to the private sector posting 60.7% growth in December. Amongst the private sector loan components, loans to individuals were the least dynamic, but even so these still grew in December by 35.2% relative to the end of 2008. The construction and retailing sectors increased their relative share of total loans granted, demonstrating the rising confidence of local private investors in the country’s productive fabric.
Deposits
At the end of November and according to available information, deposits in foreign currency recorded year-on-year growth of 45.4% (or around 35%, after correcting for the effect of the currency devaluation), whereas the growth rate for deposits in local currency was 12.3%. In fact, the Kwanza’s depreciation induced an increased preference for foreign currency at the expense of the local currency in relation to deposits, with the result that the proportion of deposits in foreign currency was close to 50% of the total (against 42% at the end of 2008).
Loans / deposits ratio
The loans / deposits ratio increased from 79% in 2008 to 83% in 2009, but nevertheless languishes at relatively low levels when compared to its regional peers, whose comparable indicator is 100%. A significant portion of Angolan banks’ resources is invested in the state’s debt instruments (credit to the public sector accounts for some 43% of total lending to the economy).
Loans evolution
th.M.AKZ
Chart 20 2 400
1 800
1 200
600
0 05 06 07 08 09
Deposits evolution
Chart 21 th.M.AKZ
2 800
2 100
1 400
700
0 05 06 07 08 09
Total domestic credit Credit to the private sector
Deposits in national currency Deposits in foreign currency Total deposits
Source: Banco Nacional de Angola (Central Bank).
State’s borrowing policy
In 2009, the Angolan authorities proceeded to alter their borrowing policy with the object of extending the maturity of their liabilities. The Angolan state unveiled a new programme of Treasury Bonds (OT), which included issues in Kwanza indexed to the American Dollar, with premiums of 4%, 4.5%, 5% and 6% for maturities of 1, 2, 3 and 4 years, respectively, as well as OT indexed to inflation with maturities of between 1 and 4 years and premiums from 3% to 5%, rising with the terms which, in the case of the 1-year OT, would be increased by 1 p.p., given the market’s weak receptiveness to the remuneration initially proposed.
The offer of Treasury Bonds (OT) led to a reduction in the amount of Treasury BillsG(BT) and Central Bank
Securities (TBC) placed, even leading to their interruption (between March and August in the case of TBC, and subsequently in the case of BT), thereby boosting the attractiveness of longer-dated securities (between 1 and 4 years). According to data made available by the BNA, the amount of OT issued up until October reached 269 billion kwanza, the equivalent of some 3.4 billion dollars.
Considering the maturity profiles of the liabilities of local banks concentrated in the short-term spectrum, financial institutions continued to focus on the acquisition of instruments with terms of up to one year so as to ensure maturity equilibrium on both sides of the balance sheet.
In this respect, the authorities continued to issue BT and TBC, albeit with some irregularity during the course of 2009 in order to attract the banks to new instruments at its disposal. Insofar as interest rates on the placing of short-term securities are concerned, there was a steep rise from April onwards which, after a long period of stability in the neighbourhood of 15%, adjusted in the closing months of the year to hover around 25%, incorporating the effect of the currency readjustment so as to maintain the level of real interest rates unchanged.
Outlook for 2010
In 2010, the Angolan economy should return to form part of the group of the region’s most dynamic economies, with economic growth projected to accelerate to 7%
according to the IMF and World Bank.
The Angolan growth forecast is founded on the one hand on favourable expectations relating to crude-oil GDP (real expansion of 3.4%) to the extent that the oil price should find support in the global economy’s recovery and, on the other, in the projection of the non-oil sector’s real growth rate of 10.5%1.
The non-extractive sector’s contribution – which has increasingly been playing the role of the economy’s driving force – should be propelled by the intensification of investment, namely the recuperation of infrastructures and the reconstruction of manufacturing units, as well as through better planning, consolidation of institutions and the greater facility in the access to credit.
The medium-term management plans put into practice by the authorities in various sectors of activity with the object of, over a period of 5 years, boosting the diversification of economic activity based on the reinforcement of private investment, should also have a positive influence on the growth in lending and deposits.
Placement interest rates
Placements of Central Bank Securities (TBC) and Treasury Bills (BT) in the last 2 years
Source: Banco Nacional de Angola (Central Bank).
1) Source: Ministry of Finance; State Budget for 2010.
Report | Background to operations 37 GROWTH
Mozambique is one of the world’s economies which grew the most in the period 2004 – 2008, presenting an annual average expansion in this period of close to 8%.
The Mozambique economy is considered by international observers to be a success story in countries with recent experiences of wars. The proper implementation of stabilisation policies and the success attained in the territory’s pacification have been the principal factors responsible for the economy’s good performance.
Moreover, the inflows of foreign investment directed at large-scale investment projects and the aid from international donors continue to play a fundamental role for the favourable economic climate which has
characterised the country.
In 2009, Mozambique continued to evidence a positive performance within the regional context, notwithstanding the slowdown in the tempo of growth dictated by the global economic crisis, from 6.8% in 2008 to around 4.5%. This favourable performance can essentially be ascribed to the maintenance of foreign investor’s investment projects, the support assured by the
Authorities’ fiscal and monetary policy and the buoyancy of domestic demand.
Furthermore, Mozambique improved its classification in the World Bank’s Doing Business 2010 ranking, advancing from 140thto 135thplace out of 183 economies surveyed.
The commencement in 2009 of the preparatory works at the coal mines of Moatize (in July) and Benga (in September) and the signature at the end of October of
a Protocol between the Mozambique state, the Insitec Group and Companhia Vale do Rio Doce (Brazil) for the development of the Nacala Corridor, marked a decisive advance in the prospects for the realisation of these short or medium term projects, with the associated
contribution to bolstering the Mozambique economy – with special emphasis on its export potential –, as well as for the integration and sustained development of the countries forming part of the Southern African Development Community (SADC), which Mozambique belongs to together with Angola, South Africa, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Namibia, the Seychelles, Swaziland, Tanzania, Zambia and Zimbabwe.