As part of the agreement on the Single Index of the Mozambican Banking System, the Mozambican Banking Association (AMB) announced the rates to be in force in March 2024. According to the AMB, the Single Index, the Cost Premium and the Prime Rate of the Mozambican Financial System were set as follows:
Single Index Rate (calculated by Banco de Moçambique – BM): 16.90%
Cost Premium (calculated by AMB): 6.20%
Prime Rate of the Mozambican Financial System: 23.10%
The Single Index, calculated on the basis of information for the period from the 26th of each month to the 25th of the following month, represents the average rate of transactions carried out on the Interbank Money Market for a maturity of one working day. The Cost Premium is the margin that reflects the risk elements of banking activity not included in interbank market operations.
The Prime Rate of the Mozambican Financial System is the single reference rate for variable interest rate credit operations and results from the sum of the Single Index and the Cost Premium. This rate applies to credit operations contracted between credit institutions and financial companies and their customers, with the addition or subtraction of a spread according to the risk analysis of each specific credit category or operation.
The Agreement on the Single Index for the Mozambican Banking System aims to promote transparency in the process of setting variable interest rates and improve the monetary policy transmission mechanism.
In addition, credit institutions must widely disclose to their clients and the general public the standardized interest rate spreads for each category of credit product. For March 2024, the standardized credit spread for each category of credit product will be added to the Prime Rate.
The spread shown in the table is indicative only, and the granting of financing is subject to each bank’s internal risk analysis, in order to assess the borrower’s debt capacity. Each bank reserves the right to apply different additional conditions, depending on the risk profile, commercial and credit history and any protocols signed with the client or their institution. The term, degree of collateral coverage and length of business relationship in all credit categories may vary depending on the risk assessment carried out by each bank.
The spread shown in the table above is only indicative and is fixed for new operations, and the granting of financing is subject to each institution’s internal risk analysis as a way of assessing the borrower’s debt capacity and the associated risk of the operation. Each institution reserves the right to apply different additional conditions depending on its risk profile, commercial and credit history and any protocols signed with the client or their institution.
The term, degree of collateral coverage and length of commercial relationship in all credit categories may vary depending on the risk assessment to be carried out by each institution.
