The Bank of Mozambique and the Mozambican Banking Association (AMB) announced on Tuesday that the prime rate for credit operations in Mozambique will remain unchanged this November, for the fifth consecutive month, at 24.10%.

The prime rate had been falling since 2018, to a low of 15.5% in February 2021, when the trend reversed and the rate began to rise to 23.5% since April, and then to 24.10% since July, which it has maintained in all the following months.

The increases in the prime rate have been associated with the central bank raising the monetary policy interest rate (MIMO rate, which influences the formula for calculating the prime rate) in order to control inflation.

In the same vein, the central bank maintained the MIMO rate at 17.25% at the end of September, as did the reserve requirements for commercial banks.

The creation of the 'prime rate' was agreed in 2017 between the central bank and the AMB to eliminate the proliferation of reference rates in the cost of money.

At the time, it was launched with a value of 27.75%.

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' according to the risk analysis" of each contract, the promoters explain.