africa Banking Currency Economy Finance Mozambique

Mozambique: Prime rate returns to decrease, falls to 19.3% in July

The benchmark interest rate of the Mozambican financial system (prime rate) is to descend for the first time since February, from 19.5% to 19.3%, as announced on Friday by the Association of Mozambican Banks and the central bank in a statement.

The amount in July is to fall in line with the decision of the Bank of Mozambique announced on 19 June of lowering the monetary policy rate. Since it was created, the reference rate has never risen and has dropped 8.45 percentage points. The creation of the prime rate was agreed on 17 May 2017 by the central bank and the Association of Mozambican Banks to eliminate the proliferation of reference rates for loans.

The idea was that all credit operations were to be based on a single rate, “plus a spread that would be added or subtracted from the prime rate depending on the risk analysis” of each contract, the organisers said.

In another table published by the Association of Mozambican Banks and the central bank presented the standard spread of 17 different banks.

Depending on the bank, the spread for individuals varied between 2.50 and 30.20 percentage points for consumer credit and between 1.0 and 6.0 for mortgages

Company credit could be as low as zero or as high as 21.80 points for loans of up to one year and between 1.0 and 21.80 points for longer maturities.

Leasing operations are subject to spreads between 2.0 and 7.75 points for moveable property leasing and between 1.50 and 7.75 for real estate leasing.

Source: Lusa via Club of Mozambique

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