Ver Angola


Oxford Economics Africa: drop in inflation allows Angola to cut 2.5 percent

The consultancy Oxford Economics Africa considered this Saturday that the drop in inflation to 12.2 percent during this year will give the Angolan central bank room to lower the interest rate to 250 basis points.

: Manuel de Almeida/Lusa
Manuel de Almeida/Lusa  

"Thanks to positive base effects, lower commodity prices and a slowdown in the growth of money rates and credit aggregates, we forecast inflation to decline from 21.3 percent in 2022 to 12.2 percent in 2023; the decline in the inflation rate will support further cuts of up to 250 basis points in 2023", write the analysts.

In the commentary on the evolution of inflation and interest rates, sent to investors and to which Lusa had access, analysts from this British consultancy recall that the National Bank of Angola has already cut the reference interest rate by 200 basis points since September and add that "the decision to lower the interest rate, from 19.5 percent to 18 percent in January, reflects the decline in inflation in 2022 and is in line with the medium and long term objectives of achieving inflation with one digit".

The room for maneuver to lower interest rates, following the downward movement of inflation in Angola, is also given by the international context, say analysts.

"The central bank considers that the growth of the world economy and inflation should moderate this year, in a context of restrictive monetary policies, reductions in supply chain problems and a correction in the prices of non-oil raw materials", says Oxford Economics Africa, recalling that the BNA forecasts an acceleration of economic expansion in Angola, from 3.2 percent in 2022 to 3.3 percent this year, and a reduction in inflation, from 13.9 percent in December to between 9 to 11 percent by the end of 2023.

On January 20, the National Bank of Angola reduced all key interest rates, cutting the basic rate (BNA, the benchmark for loans) by 1.5 percentage points, from 19.5 to 18 percent.

The interest rate on the Standing Facility for Providing Liquidity dropped from 21 percent to 18 percent, while the interest rate on the Standing Facility for Liquidity Absorption dropped from 15 percent to 14 percent.

At national level, "the macroeconomic fundamentals remain favourable", said José de Lima Massano at the end of the meeting, on the 20th, pointing to the positive performance of the goods account which registered a surplus balance of 30.92 billion dollars (+41.92 percent of that in 2021).

International Reserves stood at 14.48 billion dollars, which corresponds to coverage of around six months of imports of goods and services.


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