Credit from Mozambican banks to the Mozambican economy fell in April to 270.6 billion meticals (4.1 billion dollars), after two consecutive months of growth.
According to a document drawn up by the Bank of Mozambique (BoM), the reduction cancelled out the 0.5% growth recorded in March, when credit stood at 273.3 billion meticals, much higher than the 271.9 billion meticals recorded in February.
“Credit to the economy granted by the banks had risen last May to a maximum of 298.1 billion meticals. It then began to fall, having accumulated a drop of 2.2 per cent from December to January, when it reached 271.1 billion meticals,” the text explains.
According to the central bank document, credit to individuals continues to lead the way and in April it accumulated its fourth consecutive monthly increase of 2024, reaching almost 90 billion meticals, followed by transport and communications, with 25.7 billion meticals and trade, with 23.6 billion meticals.
“In the month under review, the average interest rate on new loan operations for companies stood at 22.19 per cent, reaching 24.69 per cent for consumption and 23.16 per cent for housing, while the prime rate stood at 22.70 per cent,” he said.
The Mozambican Banking Association (AMB) announced in June that the reference interest rate for credit operations in the country would fall to 22%, the fifth drop in six months.
“This rate, known as the ‘prime rate’, had been falling since 2018, to a low of 15.5 per cent in February 2021. A few months later, the trend reversed and the rate began to rise until it reached 23.50 per cent in April last year, rising to 24.10 per cent in July, and remaining the same in all the following months,” he explained.
Meanwhile, in January 2024, the rate fell again, after six consecutive months at highs of 24.10 per cent, settling at 23.50 per cent in February and following the same trajectory in subsequent months.
Loans to individuals continue to lead the way and in April accumulated their fourth consecutive monthly increase of 2024, reaching almost 90 billion meticals, followed by transport and communications, with 25.7 billion meticals and trade, with 23.6 billion meticals.
The increases in the prime rate have been associated with the rise in the monetary policy interest rate (MIMO rate, which influences the formula for calculating the prime rate) by the central bank in order to control inflation.
Recently, the Monetary Policy Committee (CPMO) of the Bank of Mozambique decided to lower the monetary policy interest rate again, to 15.75%, taking into account the “consolidation of the outlook for single-digit inflation in the medium term, in a context where the assessment of risks and uncertainties associated with the projections remains favourable”.
The creation of the ‘prime rate’ was agreed in 2017 between the central bank and AMB to eliminate the proliferation of reference rates on the cost of money. At the time, it was launched at 27.75 per cent.
