The reference interest rate for credit operations in Mozambique will fall to 22 per cent in June, the fifth drop in six months, the Mozambican Banking Association (AMB) announced on Saturday.
This rate, known as the ‘prime rate’, had been falling since 2018, until it reached a low of 15.5 per cent in February 2021, when the trend reversed and the rate began to rise until it reached 23.50 per cent in April last year, and then 24.10 per cent in July, which was maintained in all the following months.
In January 2024 the rate returned to April’s values, after six consecutive months at highs of 24.10%, remaining unchanged in February by decision of the AMB, at 23.50%, falling in March to 23.10%, in April to 22.70%, in May to 22.30% and now to 22%.
The increases in the prime rate are 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.
The Monetary Policy Committee (CPMO) of the Bank of Mozambique decided on 27 May to once again lower its main interest rate, known as the MIMO rate, from 15.75% to 15%, justifying this with the prospect of inflation remaining in the single digits in the medium term.
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.
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” by analysing the risk’ of each contract, the promoters explained.
Lusa
