Mozambican banks’ credit to the economy grew in March to 4.2 billion dollars (273.3 billion meticals), the second consecutive monthly increase after eight months of decline.
‘Credit to the economy granted by 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,’ he said.
According to a document drawn up by the Bank of Mozambique (BoM), this is an increase of 0.5 per cent compared to the 271.9 billion meticals recorded in February, which represented an increase of 0.3 per cent compared to January.
The report published on Thursday 23 May by Lusa explains that at the end of March the average interest rate on loans with maturities of more than two years stood at 23.82%.
Earlier this month, the Mozambican Banking Association (AMB) announced that the reference interest rate for credit operations in the country would fall to 22.30 per cent in May, the fourth drop in five 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%, settling at 23.50% in February, falling in March to 23.10%, in April to 22.70%, and now in May to 22.30%.
The increases in the prime rate have been linked to 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 inflation in single digits in the medium term, in a context in which 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.
