AfricaPress-Tanzania: COMMERCIAL banks interest rates charged on loans maintained a general downward trend observed over the recent months on account of the easing monetary policy stance.
The Bank of Tanzania (BoT) latest report shows that the overall lending rate decreased to an average of 16.79 percent from 17.23 percent in January 2019, but was higher than 16.76 percent in the preceding month.
Meanwhile, one-year lending rate declined to 15.51 percent from 17.01 percent in January 2019 and 16.28 percent in December 2019.
Consequently, the spread between one-year deposits rate and one-year lending rate narrowed to 6.24 percentage points in January 2020 from 7.38 percentage points in the corresponding month of 2019.
The overall time deposit rate decreased to an average of 6.89 percent in January 2020 from 7.34 percent in January 2019, but slightly higher than 6.79 percent registered in the preceding month.
One year deposit rate averaged 9.27 percent, up from 8.66 percent in January 2019 and 8.90 percent in the preceding month.
The decline of interest rates became an incentive to the increased domestic credit that recorded an annual growth of 6.6 percent in January 2020 compared with 6.3 percent recorded in the corresponding month of 2019.
This recovery was reflected in the expansion of credit to the private sector, which outweighed the contraction impact of central government borrowing from the banking system.
During the year ending January 2020, private sector credit grew by 9.1 percent compared with 7.3 percent in the year ending January 2019.
This development was in response to increase in loanable funds resulting from sustained accommodative monetary policy, expansion of various economic activities, and measures implemented by the Government to improve business environment.
During the reference period the growth of credit was prominent in building and construction, agriculture, transport and communication and personal related activities.
It is worth noting that credit to manufacturing activities registered a turnaround, recording a growth of 3.1 percent from a contraction of 0.8 percent in the preceding month.
In terms of proportion to total outstanding credit to the private sector, personal-related activities and trade continued to account for the largest share at 29.6 percent and 17.9 percent, respectively.
