Africa-Press – Tanzania. INTEREST rates on loans and deposits declined at the end of November last year, reflecting adequate liquidity levels in the market attributed to the Bank of Tanzania (BoT)’s sustained accommodative monetary policy.
According to the central bank’s latest report, the overall lending interest rate and one-year lending interest rate in the month under review declined by 1.33 percentage points and 1.20 percentage points to an average of 16.61 per cent and 15.70 per cent, respectively from the levels recorded in November 2019.
Likewise, the overall time deposits interest rate and one-year deposit interest rate decreased by 23 basis points and 94 basis points to 6.74 per cent and 8.43 per cent, respectively.
As a result, the spread between one-year lending and deposit interest rates narrowed to 7.27 percentage points from 7.51 percentage points.
During the reference period, domestic credit by the banking system recorded an annual growth of 20.0 per cent in November compared to 15.4 per cent in the preceding month this year.
According to BoT’s monthly economic review for December, the credit extended to the central government through purchases of government securities grew by 49.6 per cent in the year ending November compared to the annual growth of 39.1 per cent in October this year.
The bank credit extended to the private sector increased by 1.0tri/- equivalent to the annual growth of 5.2 per cent, compared to 4.9 per cent in October this year.
The credit to the private sector was more prominent in personal activities largely micro, small and medium enterprises, transport and communications and hotels and restaurants.
The private sector’s credit breakdown to various economic activities shows that, personal activities held the largest share of the total outstanding credit 33.6 per cent followed by trade and manufacturing activities accounting for 15.7 per cent and 9.9 per cent, respectively.
In November 2020, the monetary policy stance remained accommodative, driven largely by a need to improve credit flows to the private sector to support economic growth.
Consequently, extended broad money supply increased by 1.45tri/- the year ending November.
The increase in money supply translated into the annual growth rate of 5.2 per cent, compared to 5.9 per cent registered in the year ending October this year.
The broad money supply grew by 8.7 per cent compared to 10.7 per cent in the year ending October 2020. The growth of money supply was largely contributed by an increase in domestic credit.
