The reference interest rate in Mozambique will rise by 50 basis points to 19.1% in May after seven months without change, the Mozambican Association of Banks (AMB) announced today.
The rate calculated by AMB and the Bank of Mozambique is based on a single index, calculated by the central bank, which will rise from 13.3% to 13.8%, plus a 5.3% cost premium set by AMB, which remains unchanged.
The rise comes after the Bank of Mozambique decided to increase the monetary policy interest rate at the end of March, which influences the calculation formula.
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The creation of a ‘prime’ reference interest rate for credit operations was agreed between the central bank and the AMB in June, 2017, in a bid to eliminate the proliferation of interest rates in the cost of money.
At the time of its launch, the prime rate was 27.75%. It has dropped 865 basis points since then.
The objective is for all credit operations to be based on a single rate, “plus a spread, which will be added or subtracted from the ‘prime rate’ through risk analysis” of each contract, the arrangement’s promoters explain.
