The chief economist at Standard Bank Mozambique, Fáusio Mussá, believes that despite the fact that the Bank of Mozambique (BdM) has reduced the key interest rate, the MIMO rate, by a total of 225 basis points since the beginning of the year, to the current level of 15%, with the prime lending rate falling from 23.5% in January to the current level of 21.2%, the cost of money remains high in the country and is restricting the growth of the economy, excluding the extractive sector.

For Mussá, who made this reading in a comment on the results of the Purchasing Managers Index (PMI), Standard Bank's instrument for measuring economic activity, quoted by the newspaper SavannahIn real terms [nominal interest rate minus inflation], considering a year-on-year inflation rate of 3.1%, observed in May, "this, combined with the high coefficients of mandatory reserves, the intermittent supply of foreign currency and persistent fiscal pressures, is restricting economic activity".

In June, Standard Bank's PMI for Mozambique rose to a seasonally adjusted level of 51.0, a recovery from the 50.9 recorded in May, mainly reflecting further increases in production and new orders, the commentary said.

"It should be noted that there was an increase in sales prices, which indicates some improvement in aggregate demand. PMI records above the reference value of 50 suggest consecutive monthly growth in economic activity," said Fáusio Mussá.

(Photo DR)