The Bank of Mozambique (BdM) and the Mozambican Banking Association (AMB) set the Prime Rate for credit institutions at 19% for the month of January, down from 19.7% in December..

This rate in the Mozambican financial system is the only one that serves as a reference for variable interest rate credit operations. It applies to credit operations contracted between credit institutions, financial companies and clients, plus a margin (spread) which is added or subtracted according to the risk analysis of each specific credit category or operation.

According to a communiqué from the two institutions, to which the MZNews had access to, the Single Index calculated monthly by the Bank of Mozambique is set at 12.80% against the previous 13.50% in December: "the Single Index is the average rate measured by the volume of operations carried out on the interbank money market for a maturity of one working day (overnight), namely operations at the monetary policy interest rate (MIMO rate) between the BdM and the commercial banks".

Also according to the document, the agreement on the Single Index for the Mozambican banking system aims to promote greater transparency in the process of setting variable interest rates in the market and to improve the monetary policy transmission mechanism.

The creation of the Prime Rate was agreed in 2017 between the central bank and AMB to eliminate the proliferation of reference rates on the cost of money.

(Photo DR)