Angola's central bank raised its benchmark base rate, the BNA rate, by another 200 basis points to 16.0 percent in an effort to encourage savings, reduce the need for foreign exchange and curb accelerating inflation.
The National Bank of Angola (BNA) has now raised its policy rate by 500 basis points this year following hikes in February and March.
In its meeting on June 30, the BNA's monetary policy committee also raised the rate on its liquidity lending facility by 400 basis points to 20.0 percent and the rate on its liquidity absorption facility by 500 points to 7.25 percent.
Angola is suffering from an acute shortage of foreign exchange due to the fall in crude oil prices since mid-2014 and the central bank appealed for a "rational" use of foreign exchange by economic agents so there is still enough available to meet the essential needs of the population. Households and businesses rely heavily on imports.
In addition to hitting the exchange rate of Angola's kwanza, the fall in export revenue and foreign exchange from lower oil prices has negatively affected the supply of goods and services, boosting prices and inflation, a trend that the central bank said it "noted with concern."
Angola's inflation rate accelerated to 29.23 percent in May from 26.41 percent in April, boosted by the depreciation of the kwanza and the removal of fuel subsidies.
In May Angola's foreign exchange reserves fell to $24.408 billion from $24.774 billion in April.
The central bank has devalued the kwanza several times in the last year and today it was trading at 165.7 to the U.S. dollar today, down 18.4 percent this year and down 38 percent since the start of 2015.
Angola earns practically all its foreign exchange and 80 percent of government revenue from oil exports and recently surpassed Nigeria as Africa's top oil producer due to attacks by militants in Nigeria's oil-producing delta.
Angola's government is currently in talks with the International Monetary Fund for assistance of a reported $4.5 billion and last week news agencies reported that Goldman Sachs was arranging a syndicated loan for about $1 billion, part guaranteed by the World Bank.
Following a visit by the IMF this month to discuss an Extended Fund Facility (EEF) program, IMF official Ricardo Vellosa on June 14 that the outlook for Angola's economy remains difficult despite the recent rise in oil prices and economic activity will likely decelerate further this year following growth of 3 percent in 2015, down from 4.8 percent in 2014.
Angola's government last year cut spending in response to lower revenue and Vellosa called for further steps and continued fiscal prudence in the run-up to elections next year.
He also called for tighter monetary conditions to contain inflation and the need to rebalance the foreign exchange market towards greater flexibility while administrative restrictions on access to foreign exchange at the official rate, which is a drag on economic activity, will have to be phased out.
Earlier this week the central bank said it would sanction seven financial institutions for failing to comply with its foreign exchange rules.