Mozambican employers criticise central bank’s decision to raise base lending rate

18 January 2011

Maputo, Mozambique, 18 Jan – The Confederation of Economic Associations of Mozambique (CTA) has criticised the measures announced last week by the Bank of Mozambique to slow price rises, in a letter published in newspaper, Notícias.

In the letter, the business owners ask the central bank to go back on the decision and attack the governance of the bank for “not making sue of channels of dialogue established between the government and the private sector.”

On 11 January, the Commission for Monetary Policy of the bank of Mozambique decided to raise the base lending rates, which are the main variables in the behaviour of interest rates on the market, raising, for example, Required Reserve Rate rising from 8.75 percent to 9 percent.

In a six-point document, the business owners said that a rise in base lending rates would impact interest rates offered by retail banks as most of the loans provided by the banks are indexed to the Permanent Lending Rate, which will lead to a reduction or an end to private investment decisions due to high financing costs, which reduces debt capacity and thus economic growth. (macauhub)