Mozambican benchmark interest rate cut by 100 basis points to 16.9%

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Mozambican benchmark interest rate cut by 100 basis points to 16.9%

1:23 CAT | 01 Jun 2020

File photo: NM

Mozambique’s benchmark interest rate will fall from 17.9% to 16.9% in June, the second consecutive monthly fall, the association of banks and the central bank announced.

The cut of 100 basis points in the ‘prime rate’ happens after a fall of 50 basis points in May, and comes at a time when entrepreneurs are asking for more support and relief in the cost of money due to the impact of Covid-19.

The National Statistics Institute (INE) has meanwhile announced that Mozambique’s Economic Climate Indicator (ICE) fell in April to “the lowest level in the last ten years”, reflecting the impact of the pandemic.

Mozambique now has 254 cases of Covid-19 infection, with two deaths and 91 recovered.

Since October 2018, there have been no cuts of 100 basis points or higher in the Mozambican prime rate, which was created in June 2017, with a value of 27.75%.

The creation of the ‘prime rate’ was agreed between the central bank and the Mozambican Banking Association (AMB) to eliminate the proliferation of different interest rates.

The objective was that all credit operations be based on a single rate, “plus a margin (spread) added or subtracted from the ‘prime rate’ according to risk analysis”, the scheme’s promoters explained at the time.

Source: Lusa