Mozambique: Reference interest rate for credit remains at 24.10% for the fifth straight month

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Mozambique: Reference interest rate for credit remains at 24.10% for the fifth straight month

12:25 CAT | 01 Nov 2023

File photo: DW

The reference interest rate for credit operations in Mozambique will remain unchanged for the fifth consecutive month in November at 24.10%, the Mozambican Bank Association (AMB) announced yesterday.

Since 2018, the prime rate had been falling, reaching a minimum of 15.5% in February 2021, when the trend reversed and the rate began to rise until reaching 23.5% since April, and then to 24.10% since July, which was maintained in all subsequent months.

Increases in the ‘prime rate’ have been associated with the increase in the monetary policy interest rate (MIMO rate, which influences the formula for calculating the ‘prime rate’) by the Bank of Mozambique, in order to control inflation.

At the end of September, the Mozambican central bank maintained the MIMO rate at 17.25%, the same happening with the mandatory reserves required from commercial banks.

The creation of the ‘prime rate’ was agreed in 2017 between the central bank and the AMB to eliminate the proliferation of reference rates in the cost of money.

At the time, it was launched with a value of 27.75%.

The objective is for all credit operations to be based on a single rate, plus a margin (‘spread’), which will be added or subtracted from the prime rate through risk analysis of each contract, the promoters explained.

Source: Lusa