Bank of Mozambique’s higher interest rates have come into force

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Bank of Mozambique’s higher interest rates have come into force

4:08 CAT | 26 Aug 2016

File photo / Bank of Mozambique building in Maputo

The highest benchmark interest rates in the last 12 months came into effect this week at the instigation of the Bank of Mozambique, and will apply to all bank loans contracted or requested from 22 August.

To date, the minimum interest rate (prime) for loans at the Millenium BIM was 22.25 percent, and 23 percent at BCI. From April to June, it had risen from 19.07 percent to 19.20 percent.

From September 2015 to this month, the Central Bank has increased the benchmark interest rate seven times, the last increase having been the biggest, of 300 basis points, which came into force this week.

The Bank of Mozambique’s increase in interest rates is intended to curb inflation and stabilise the exchange rate of the metical against the main foreign currencies used in the country, chiefly the US dollar and the South African rand.

But some Mozambican economists, such as Roberto Tibana, have warned that this measure will not solve the problem and suggest cutting what they consider “rampant” state expenditure instead.

Source: O País