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Interest Rates: Prime Rate Held at 22.6% in February

Interest Rates: Prime Rate Held at 22.6% in February

The Bank of Mozambique (BoM) and the Mozambican Association of Banks (AMB) set the single indexing rate, the cost premium and prime rate in force in credit institutions for February at 22.6 percent, keeping it unchanged, the two organisations announced on Tuesday, 31 January.

The Single Index Rate is the average rate measured by the volume of operations carried out in the Interbank Monetary Market for a maturity of one business day (overnight maturity). It specifically refers to monetary policy interest rate (MIMO rate) operations between the BoM and commercial banks (currently set at 17.25%) and repo operations (those representing loans of money between commercial banks). The Single Index is calculated monthly by the BoM.

The cost premium, meanwhile, is the margin that represents the risk elements of the banking activity not reflected in the interbank market operations, to which the Single Indexante is added to constitute the prime rate of the Mozambican financial system. The cost premium is calculated quarterly by the AMB, based on a methodology that takes into account the country’s rating, the ratio of non-performing loans, the ratio of reorganised loans and the mandatory reserve coefficient for liabilities in local currency.

The prime rate of the Mozambican financial system is the single reference rate for credit operations at a variable interest rate and results from the sum of the Single Index and the cost premium.

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