Luanda – The governor of the National Bank of Angola (BNA) José de Lima Massano Thursday predicted an Inflation rate below 16 percent this year.
The governor said so at the opening of the “II Forum Banking and Insurance”, promoted by AJECO – Association of Economic Journalists, underlining that “it is already certain that we will end the year 2022 with an inflation rate below 16%.
He justified that, taking into account this inflation rate, the maintenance of the course of greater price stability in the national economy is expected for 2023 ”.
According to the manager, at that time the positive effects begin to be more visible. For example, he said that the 12-month Luibor rate (the most used index for credit in national currency), which at the end of 2021 stood at 24.73%, is currently at 15.27% - a significant drop of 12 .46 percentage points, easing in many cases the financial burden of companies and families with banking responsibilities.
On the other hand, he said that there are risks, both external and internal, that could influence this downward trend in interest rates, as the national economy remains highly dependent on imports and revenues from oil exports.
Referring to oil - the main source of funds in foreign currency, he explained that its revenues derive from the market price and the quantity exported and that the market price is linked to the performance of the main world economies.
He also explained that the monetary stimuli implemented during the Covid-19 pandemic and the war in Eastern Europe have been contributing to a generalized increase in prices that, inevitably, led to an increase in interest rates in the main international financial markets, reinforcing the probability of an “anemic” world economic performance.
Still on the subject of price, he referred to the bad debt ratio in the system, which is currently around 21%, having already reached higher values.
In the view of the BNA governor, one of the consequences of bad loans, in addition to discouraging banks, is the increase in the price of credit, because bad loans cannot be covered by customer deposits but by bank profits, which result from the margin finance, depending on the interest rates applied.
Regarding the issue of credit and prices, he also said that the possibility of a company taking out credit depends largely on demonstrating the quality of its management, viability and financial capacity to fulfill the responsibilities it intends to assume before the bank. “This condition has been one of the main reasons for rejection of bank credit applications”, he underlined.
In general, in José de Lima Massano's opinion, the success of our country depends on the sustainable growth of our economy and access to credit is one of the fundamental actors for its development, but the risk appetite must be established in order to guarantee the sustainability of the financial system.
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