Mozambique's benchmark interest rate will drop 30 basis points to 18.6% in September, the Mozambican Association of Banks (AMB) announced this Thursday.

The decline comes after six consecutive months of maintaining the prime rate at 18.9%.

The rate for September calculated by AMB and Banco de Moçambique is based on a single index of 13.3% (calculated by the central bank) which remains unchanged and a cost premium of 5.3% (defined by AMB) which drops from 5.6%, a drop of 30 basis points.

The creation of the 'prime rate' with an initial value of 27.75% was agreed between the central bank and the Mozambican Association of Banks (AMB) in June 2017 to eliminate the proliferation of reference rates in the cost of money. 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, explain the promoters.

Lusa Agency