Mozambican benchmark interest rate remains at 19.5% for the third consecutive month

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Mozambican benchmark interest rate remains at 19.5% for the third consecutive month

2:34 CAT | 01 Apr 2019

in file CoM

Mozambique’s benchmark prime interest rate will remain at 19.5% in April, according to the Mozambican Banking Association and the central bank.

The value had remained the same since February. This is the first time the rate has dropped for so many consecutive months, excluding the first three in which it existed (from July to September 2017).

Since it was set up, the benchmark rate has already fallen by 8.25 percentage points.

Maintaining the prime rate in April comes after the central bank’s monetary policy committee decided in March to keep the monetary policy interest rate (MIMO rate), one of the key components of the benchmark rate, unchanged.

At the time, the decision was justified by the fact that “inflation remains low and stable, but there is a risk of acceleration”.

The creation of the prime rate was agreed on May 17, 2017 between the central bank and the Mozambican Association of Banks (AMB) to eliminate the proliferation of different rates in the cost of money and entered into force on June 1, 2017.

The aim is for all credit operations to be based on a single rate, “plus a spread, which will be added to or subtracted from the prime rate by risk analysis” of each contract, the institutions explain.

Another table published by the Mozambican Association of Banks and the central bank shows the standard spread (increase to the interest rate) of 17 Mozambican credit institutions.

For credit to individuals and according to the bank, this margin can vary between 2.50 and 30.20 percentage points for consumer credit and between one and six points for mortgage loans.

For business credit, the margin ranges from zero to 21.80 points for one-year loans, and between one and 21.80 points for longer terms.

Leasing operations are subject to spreads of between two and 7.75 points for furniture leasing and between 1.50 and 7.75 for real estate leasing.

Source: Lusa