By Noémia Mendes
Maputo (MOZTIMES) – Mozambique’s benchmark interest rate for credit will drop from 18% to 17.4% starting Tuesday, 1 July 2025, the Mozambican Banking Association (AMB) announced on Monday.
According to the AMB’s statement, this is the third rate cut in 2025, following reductions in March and May. In June, the rate remained unchanged at 18%. The new cut also aligns with the Bank of Mozambique’s decision to lower the MIMO rate – the monetary policy reference rate – from 11.75% to 11.00%, a decision made on 30 May 2025.
Teresa Boene, an economist at the Centre for Public Integrity (CIP), views the reduction in the Prime Rate as positive, but notes that its practical impact depends on how commercial banks implement the measure.
“The cut in the reference rate clearly signals an intention to stimulate the economy by making credit more accessible in theory. However, the actual effect on consumers and businesses will depend on the spread applied by each bank,” Boene told MOZTIMES.
According to the economist, the spread – the margin added by banks to the Prime Rate – varies depending on the client's risk profile and the type of loan, whether for consumption or housing.
“Even with a reduction in the base rate, if banks maintain high spreads, the final cost of credit may not change significantly,” she warned.
Still, Boene points out that although a 0.6 percentage point reduction may seem modest, it represents relief for borrowers with variable interest rate loans.
“This could ease the financial pressure on households and businesses, especially at a time when the country is facing economic hardship caused by climate change, public unrest, and a slowdown in GDP growth,” she concluded. (NM)
