Mozambique sees 100-basis-point decline in Treasury Bill yields over three months

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Mozambique sees 100-basis-point decline in Treasury Bill yields over three months

8:48 CAT | 06 Oct 2025

File photo: Lusa

The yields paid on Mozambique’s Treasury Bills fell by around 100 basis points over the last three weeks, according to data from the central bank, which attributes this to the progressive reduction in the key interest rate.

In the Economic Outlook and Inflation Forecasts (CEPI) Report for September, released on Friday, the Bank of Mozambique identifies a “reduction in interest rates” on Treasury Bills, shorter maturity debt securities, recorded between May and September.

“BT interest rates for maturities of 91, 182 and 364 days fell by between 92 and 121 basis points to 11.80%, 12.22% and 12.26% respectively, in line with the downward adjustment of the MIMO rate,” the report reads.

This performance contrasts with the peak of around 19% recorded in January 2024, as explained in the document’s history, which also acknowledges that “the pressure on domestic public debt continues to worsen, with an impact on the normal functioning of the government securities market”.

“Domestic debt, excluding loan and lease contracts and outstanding liabilities, stands at 454.4 billion meticais (€6.058 billion), which represents an increase of 38.8 billion meticais (€517.3 million) compared to December 2024,” the central bank also points out in the report.

The issuance of T-bills primarily drove this growth, as the state held only five-year exchange auctions for Treasury Bonds (with longer maturities) between May and September.

“In the last auction, the fixed interest rate was 13.95%, corresponding to a reduction of five basis points compared to the rate in the previous exchange auction of the same maturity,” he adds, and according to the historical record, Treasury bond interest was around 20% in January 2024.

On 29 September, for the tenth consecutive time, the Monetary Policy Committee (CPMO) of the Bank of Mozambique cut the MIMO monetary policy interest rate by 0.50 percentage points to 9.75%, announced the governor, Rogério Zandamela.

“This measure stems essentially from the maintenance of inflation prospects in single digits in the medium term, partly reflecting the stability of the exchange rate and the favourable trend in international commodity prices, despite the prevalence at domestic level of high risks and uncertainties associated with the projections,” the governor said at a press conference in Maputo at the end of the CPMO meeting, which is held every two months.

The key interest rate in Mozambique has been set at 17.25% since September 2022, following intervention by the central bank. The central bank then began consecutive cuts, starting from 31 January 2024, when it was reduced to 16.5%.

“The CPMO will continue with the process of normalising the minimum rate in the medium term, but at modest magnitudes – I would say increasingly modest – the pace and magnitude will continue to depend on the inflation outlook, as well as the assessment of risks and uncertainties underlying the medium-term projections,” he said.

The governor recalled that this “normalisation process” started at the beginning of 2024, with an estimated timeframe of “24 to 36 months”, which has now come to fruition, ending up “benefiting” families, companies and the state by accumulating a drop of 700 percentage points.

“It was a huge gain for the system,” he pointed out, while recognising that the banks’ benchmark interest rate for their customers had also “dropped substantially”, by around 600 percentage points over the same period, but without fully keeping up with the drop in the central bank’s key rate, as it depends on the customer profile.

Source: Lusa