Bank of Mozambique plans new rate as foreign-currency curb ends

Mozambique’s central bank will introduce a prime lending rate in two months and immediately removed a curb on how much citizens can spend overseas using their bank cards.

The introduction of the new rate on April 15 “is intended to strengthen the mechanism for the formation of interest rates on the market as a whole and to make it more transparent,” Governor Rogerio Zandamela told reporters Monday in the capital, Maputo.

He removed a 700,000-metical ($9,950) annual limit on payments that people can make outside of the southern African nation using international bank cards. The end of the curb is immediate, Zandamela said as his Monetary Policy Committee kept the benchmark rate at 23.25 percent.

Zandamela, a former International Monetary Fund employee, raised the key rate by 600 basis points in his first rate decision in October. The MPC increased the rate five times last year as inflation accelerated and the currency sank to a record low. Consumer-price growth slowed to 20.26 percent in January after peaking at 26.83 percent in November.

Mozambique’s economy is struggling under mounting debt after the global commodity slump, coupled with a freeze on aid, put its finances under pressure. The government owned up in April to the existence of $1.4 billion of previously undisclosed borrowing, including loans taken out by state-owned companies.

Source: Bloomberg