November 5, 2015 / 5:13 PM / 4 years ago

Angola tightens foreign currency controls as oil price slides

LUANDA, Nov 5 (Reuters) - Investors, visitors and residents of Angola may struggle to withdraw cash from their bank accounts after the government of Africa’s second largest crude exporter said it would restrict foreign currency transactions.

The regulatory arm of Bank of Angola said in a statement on Thursday that it would reduce the delivery of banknotes in foreign currency to travellers as well as limit withdrawals from foreign currency accounts.

The Angolan Association of Banks (ABANC) said it was imposing the restrictions to align itself with global financial and anti-money laundering regulations.

One analyst said the intensifying currency controls were a move by the central bank to protect the kwanza, which has weakened by about 35 percent to the dollar this year.

“It seems as if they’re moving more and more towards the Nigerian case,” NKC African Economics Angola analyst Cobus de Hart said.

Nigeria introduced tight currency controls in February as the global price of oil plunged below $50 dollar per barrel, turning the screws on Africa’s top oil producer.

In September, Angola’s central bank devalued the kwanza by about 4 percent and tightened dollar liquidity after a devaluation of 6 percent in June. But the currency has continued to weaken while a black market for dollars and other foreign currencies flourishes to meet demand.

“Additional forex restrictions will shield the currency and foreign reserves to an extent, but may hold adverse consequences for the business environment,” de Hart said.

The economy will grow more slowly than expected this year, the government has said, as lower oil revenues hit public spending, hobble the currency and push up debt levels after a recent sharp drop in oil prices LCOc1 sapped dollar inflows. (Writing by Mfuneko Toyana; Editing by James Macharia)

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