O Center for Democracy and Development (CDD) accuses the Bank of Mozambique (BM) of being obsessed with single-digit inflation, which stifles Mozambican entrepreneurs and families.

According to the NGO, the Central Bank's "aversion" to inflation leads the regulator into an "increasingly vicious" cycle of making money more expensive in Mozambique.

The WB is the leading institution that has adopted a more restrictive and conservative stance in managing monetary policy instruments at the SADC region level. This year alone, it has increased its interest rate by 400 basis points, according to CDD.

"The first increase, in the order of 200 basis points (bp), was recorded in the March session, after spending a year and two months unchanged at the level of 13.25%. The second adjustment, of the same magnitude as the first, was communicated in the fifth and penultimate session of the Monetary Policy Committee (MPC) last September, raising the rate to the current 17.25%, which totals a 400bp increase since the first session in January," writes CDD.

In addition, last month the WB worsened "the Standing Liquidity Facility rate from 18.25% to 20.25%, the Deposit Facility rate from 12.25% to 14.25%, and maintained the Mandatory Reserves ratios for domestic currency liabilities at 10.50%, and foreign currency liabilities at 11.50%."

The organization predicts that the commercial bank interest rate will worsen to 22.60% in the coming months. This forecast takes into account the prime rate remaining at 20.60% in October, as in the previous four months.

"If fuel and food price volatility prevails, the conditions for obtaining financing will become even more prohibitive and servicing existing debt at commercial banks even more onerous for Mozambican businesses and households." reads.