Mozambique firms struggling to repay loans

26 August 2016

Successive increases in benchmark interest rates decided by the Bank of Mozambique are leading some companies having difficulties in repaying their loans, according to independent newspaper Mediafax.

Since October 2015 the central bank has been raising interest rates to contain inflationary pressures, and with the latest increase, last July, the lending rate was increased by 300 basis points to 17.25%.

Commercial banks followed the decision of the central bank and increased their interest rates for customers, making the cost of borrowing, particularly for small and medium-sized enterprises, increasingly expensive.

A spokesman for the Confederation Economic Associations of Mozambique (CTA), economist Eduardo Sengo, confirmed to the newspaper that there are companies struggling to repay loans, although he did not identify them or give a figure.

Sengo also said that the CTA is recommending companies in difficulties analyse their financial situation and draw up a plan to present to the banks where loans were contracted. (macauhub/MZ)