Prime rate unchanged at 22.5%

Mozambique’s prime rate, the country’s benchmark interest rate, was kept unchanged at 22.5% in July, the Bank of Mozambique, the country’s central bank, and the Mozambican Association of Banks (AMB) announced in a joint statement on Tuesday.Since the prime rate was instituted in June last year, the rate has been reduced by 5.25 percentage points.

The decision to create the prime rate resulted from an agreement reached on 17 May last year between the central bank and AMB that aimed at eliminating the proliferation of benchmark lending rates. It took effect on 1 June of 2017.

The objective was for all credit operations to be based on a single rate, to which would be “added a margin (spread), that would be added or subtracted from the prime rate according to the risk analysis” for each contract, its investors said at the time.A table released on Tuesday by the AMB and central bank shows the maximum spread of 20 lending institutions, with this table this being unchanged from June.Among the five leading banks, the spread applied ranges between 9.5 and 12.5 percentage points for consumer credit, between 7 and 11.25 points for short-term loans of less than a year, between 8 and 11.5 points for long-term loans, between 2.75% and 8 points for mortgages, and between 5 and 10 points for leasing and factoring contracts.