The Mozambican Association of Banks (AMB) announced today that Mozambique's benchmark interest rate for December will remain at 18.6% for the third consecutive month.

The rate calculated by AMB and Banco de Moçambique is based on a single index of 13.3% (calculated by the Central Bank) that remains unchanged and a cost premium that also remains at 5.3% (defined by AMB).

The prime rate of 18.6% was set on October 1, after a drop of 30 basis points compared to September.

In 2021, the prime rate started at 15.5%, rose in March and April, to 17.8% and 18.9%, respectively, and then fell to the current value in October.

Its creation was agreed upon between the WB and AMB in June 2017 to eliminate the proliferation of reference rates in the cost of money.

At the time, it was launched at 27.75% and has dropped 915 basis points since then. The goal is for all credit operations to be based on a single rate, "plus a spread, which will be added to or subtracted from the prime rate depending on the risk analysis" of each contract, explain the promoters.

Note that the next rate update will not happen until 2022, and is scheduled for January 1st.