The Mozambican prime rate for credit operations in Mozambique in June will be 23.5 percent, the Mozambican Association of Banks (AMB) announced, the maximum value of the last five years.
According to the Bank of Mozambique (BoM), the last time the rate reached this value was in May 2018. Since then, the prime rate has fallen to a low of 15.5% in February 2021, when the trend reversed and the rate began to rise to 23.5% since April.
The 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 central bank, in order to control inflation.
This week, the BoM maintained the MIMO rate at 17.25% and increased the reserve requirements for 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 on the cost of money. At the time, it was launched with a value of 27.75 per cent.
The aim is for all credit operations to be based on a single rate, “plus a margin (spread), which will be added to or subtracted from the prime rate upon risk analysis” of each contract, the promoters explain.