Report by the International Agency, Global WF, gives a positive note on the good management of funds from the national oil sector for the country’s economic development
The Fundo Soberano e Desenvolvimento de Angola (FSDEA) scored 80 percent in the 2022 International Ranking on Governance, Sustainability and Resilience (GSR), above the index average of 49 percent, placing the fund among the top 15 , in an index composed of more than 160 sovereign wealth funds and sovereign investors.
The most surprising countries on this list, according to the agency, are perhaps Nigeria, South Africa and Angola, with one state investor each. The document tries that the elite club does not include Chile, which falls short in sustainability and the United States of America (USA), which falls short in both sustainability and resilience. Countries with multiple funds are more likely to be in the middle of the table as not all are managed equally, especially when SWFs are mixed with PPFs. In this assessment, the agency also includes in its sample countries that have only one sovereign investor and that perform poorly. Some of these include newly created funds such as Egypt’s TSFE, Cyprus’ NIF and Djibouti’s FSD and others are stabilization funds with very little information such as Botswana’s Pula, Peru’s FEF and Turkmenistan’s STF.
The exceptions to this rule are Russia and Mongolia. The two Russian SWFs found themselves subject to sanctions overnight, which affected their transparency and operations. The NWF stopped publishing its monthly statistics, while the RDIF removed its partnerships from its website. Mongolia is still figuring out how to manage its significant mineral wealth and has created five different FSIs in the last 15 years. The three that still exist have very low scores and virtually no public information available.
Credit rating
The agency tested the national-level ranking for relevance and correlation with a few other metrics. The first is the sovereign debt credit rating, measured by the three main agencies: Standard & Poor’s, Moody’s and Fitch Ratings. Alphanumeric rankings are converted to numbers and averaged across the three data points for each country. Only eight territories are not classified by the agencies: Nauru, Libya, Iran, Palestine, Kiribati, Cape Verde, Monaco and Brunei. The resulting list of numerical ratings indicates a moderate positive linear relationship between ranking scores and average credit ratings, at 0.55. The correlation with each of the individual factors is exactly the same: 0.47. The GSR Scoreboard aims to score over 400 sovereign wealth funds and pension funds on 25 elements: 10 related to governance structure, 10 on sustainability and 5 on resilience. BNA concludes 3rd phase of the Prudential Supervision Standards Project The National Bank of Angola (BNA) concluded Phase 2 of its Regulation and Supervision Convergence Project, as part of the process of adapting its regulatory framework and prudential supervision standards to the recommendations and guidelines issued by leading international bodies. The phase was essentially focused on the execution of the supervision process based on the revised regulations and on the execution of the Analysis and Assessment Process by the Supervisor. Thus, with Phase 2 concluded as planned, the BNA carried out a diagnosis of its prudential framework vis-à-vis the Eurozone and the Basel Fundamental Principles for Effective Banking Supervision to assess the degree of compliance of its prudential regime. The diagnosis took into account the following main reference elements: (i) the European Banking Entity (EBA) Guidelines on the SREP – 2022, (ii) Basel Core Principles for Effective Banking Supervision and (iii) the EBA Questionnaires of 2022.
In this context, the matters that were subject to assessment are highlighted below: own funds and capital requirements, liquidity risk, capital reserves, market discipline and disclosures, as well as macroprudential and large risk supervision frameworks, having the aforementioned diagnosis concluded that the development effort carried out in the Angolan Financial System can be considered as convergent or largely convergent with the practices of international reference. BNA reinforces that any divergences that may exist at the level of regulation or the supervisory process refer to adaptations to the market and the local reality, generally resulting in a more conservative supervisory approach. Having fulfilled all the objectives outlined for the first two years of the Project, the efforts of the BNA will be focused on Phase 3, which essentially consists of the consolidation of the reforms carried out, the application of new regulations, the execution of the SREP, including Effort to the System and the strengthening of interaction with strategic partners. The convergence of regulation and supervisory standards to best practices is an essential step towards the stability and increasing integration of the Angolan Financial System in the international financial context.
