Angola's debt related to imports of goods amounted has reduced significantly according to the head of the country's central bank, José de Lima Massano.

The National Bank of Angola (BNA) governor is a strong supporter of moves introduced last year to persuade importers to use letters of credit (L/Cs) to buy foreign goods.

The moves aimed to reduce debts related to imports and curb trade-based money laundering.

Reduced debts

Angola's import related debt has fallen from around US$5 billion at the end of 2017 to around US$3 billion at the beginning of this year Massano says.

The governor reckons that, unlike the transfer orders that have historically been used to pay for imports, L/Cs guarantee both the delivery of the goods into Angola and the documentation necessary to confirm the availability of resources, specifically foreign currency, to pay suppliers.

Afreximbank L/C support

Last year Massano brokered an agreement with the African Export Import Bank (Afreximbank) for the bank to confirm L/Cs for Angolan imports of essential commodities.

Afreximbank president, Benedict Oramah, meanwhile said the bank would provide a financing line of up to US$2 billion to guarantee imports of food and medicines into Angola.

Angolan bank L/Cs

Oramah said the financing would also support the financial services sector by enabling selected Angolan banks to issue L/Cs to be confirmed by Afreximbank (DC World News, 25 June 2018).

The central bank provided US$1.6 billion for L/C openings for imported goods between September 2018 and 31 January 2019, of which US$923 million have already been settled according to a BNA statement.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.