Banks maintain reference rate - The Times Group Malawi

Malawian Banks maintain reference rate of around 13.6 percent for October 2020

Post was last updated: October 7, 2020

Most commercial banks have maintained their reference rate this month at 13.6 percent.

The reference rate is a benchmark rate used to determine other rates and it is arrived at through the average of Lombard Rate, Interbank Rate, Commercial banks savings rate and treasury bills.

In published statements, various commercial banks indicated that they had maintained the reference rate.

Responding to an emailed questionnaire, Bankers Association of Malawi (Bam), Chief Executive Officer, Lyness Nkungula, attributed the stability in the reference rate to a reduced government borrowing among other reasons.

“There have been consistent overnight interbank borrowing rate (the rate of interest charged on short-term loans made between local banks) and the government has reduced domestic borrowing,” Nkungula said.

Economics Association of Malawi (Ecama) believes it is too early to conclude that this may signal that the economy is sailing through good waters.

Ecama president, Lauryn Nyasulu said it will be important for the country and other stakeholders to monitor the economy for a longer period to judge its performance.

Nyasulu added that the reduced government borrowing may be a result of government’s quest to look into other borrowing means and reduce domestic borrowing which she says is a good move.

“Recently, we have got the RCF approval from IMF. So the alternatives on the international market are always a better option because it is less costly and it also helps the country to overcome the challenges that come with high domestic borrowing,” Nyasulu said.

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