Maputo — The prime rate, which is responsible for loans and other credit operations in the financial system, has fallen from 24.1% to 23.5%, a reduction of 0.60 percentage points, according to a Mozambican Banking Association statement.

It means that the reference rate for bank loans, to be applied during the month of January, has fallen by 0.60 percentage points.

"From the previous 24.10%, the Reference Rate for the Mozambican Financial System is now 23.50%, of which 17.30% is the Single Index, calculated by the Bank of Mozambique; and 6.20% is the Cost Premium, calculated by the Mozambican Banking Association', reads the note.

According to the statement, "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, the note explains, applies to credit operations contracted between credit institutions and financial companies and their customers, plus a margin (spread) which will be added to or subtracted from the Prime Rate, depending on the risk analysis of each specific credit category or operation.

The first quarter of last year was the period with the lowest reference rate, when it was 22.60%.