The Confederation of Mozambican
Business Associations (CTA) has called for a sharp reduction in interest rates
charged by the country’s banks, reports Monday’s issue of the independent
newssheet “Carta de Mocambique”. In a study on the impact on Mozambican
businesses of the respiratory disease Covid-19, the CTA calls for the Bank of
Mozambique’s monetary policy interest rate (MIMO) to be cut from the present
12.75 per cent to 6.55 per cent. The MIMO rate governs the central bank’s
interventions in the interbank money market, and is supposed to give a lead to
the commercial banks.
The CTA argues that the current
monetary policy indicators, together with the low rates of monthly and annual
inflation, show that “there is considerable space for a reduction in the key
interest rates without affecting the real income of savers and without
significantly compromising the stability of inflation”.
The CTA calls on the central bank
to slash its other interest rates too. It wants the Standing Lending Facility
(the interest rate paid by the commercial banks to the central bank for money
borrowed on the Interbank Money Market) to fall from 15.75 per cent to 12.2 per
cent, and the Standing Deposit Facility (the rate paid by the central bank to
the commercial banks on money they deposit with it) to be cut from 9.75 to 3.55
per cent.As for the rates charged by the commercial banks, the CTA wants to see
the Prime Rate fall from the current 18 per cent to 11.8 per cent. These
reductions, it claims, apart from injecting liquidity into the economy, would
be a pillow to help support the losses that Covid-19 could cause in the income
of the financial sector, and the obligations that private companies have to the
banks.
The CTA says that the sectors
most affected by Covid-19 are tourism (hotels and restaurants), transport (both
air and road transport), and agriculture. It claims these sectors have suffered
falls in income of 95, 70 and 47 per cent respectively. The total loss in these
sectors is put at 355 million US dollars.The measures the CTA proposes for
these sectors are delays in tax payments, and allowing them to suspend labour
contracts and lay off staff for six months.The CTA says it gave its study to
the Minister of Industry and Trade, Carlos Mesquita, last Thursday, and the
government is expected to reply to the document in the near future.
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