Reserve Bank of Malawi’s (RBM) daily financial market reports show that Interbank rates have risen by 11 percentage points from 3% in mid-April last year to 14%.

According to the central bank, the increment is a sign of banks’ desperation to meet liquidity requirements. RBM spokesperson Mbane Ngwira told The Nation newspaper that the central bank foresaw the situation, hence it had slashed Liquidity Reserve Requirement [LRR] and Lombard Rate to ease liquidity pressures on banks thus making more funds available.

By Wednesday last week, some commercial banks had raised their reference rates by at least 1%, as revealed in statements by NBS Bank, FDH Bank, National Bank of Malawi and Ecobank.

The development will see the respective banks’ borrowers paying 1% more in interest on their loans following the increase in reference rates. On the other hand, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) said it expects an increase in domestic borrowing fueled by unexpected expenditures on Coronavirus.