AfricaPress-Tanzania: THE interest rates charged and offered by banks on loans and deposits declined in the year ended March from the corresponding month in the preceding year largely due to sustained liquidity easing monetary policy to support credit intermediation to various economic activities.
The Bank of Tanzania (BoT), monthly economic review for April shows that the overall and one-year lending rates fell to 16.78 percent and 15.83 percent from 16.84 percent and 15.84 percent in the preceding month, and from 17.27 percent and 17.59 percent in the corresponding month of 2019, respectively.
As regards to interest rates on deposits, overall and one-year deposit rates declined to 6.83 and 8.10 percent from 6.87 percent and 8.60 percent in February 2020, and from 7.64 percent and 9.01 percent in March 2019, respectively.
As a result, interest rate spread between one-year deposit and one-year lending rates narrowed to 7.73 percentage points in March 2020, down from 8.58 percentage points in March 2019.
During the period under review, banks credit to the central government and private sector grew by 6.5 percent in March compared with 5.8 percent recorded in the preceding month and 6.9 percent in the corresponding month in 2019.
Much of the growth was credit to private sector, which recorded an annual growth of 8.6 percent compared with 8.0 percent in the preceding month and 9.6 percent in the corresponding month in 2019.
This partly reflects adequate supply of loanable funds following intensified liquidity easing monetary policy measures. High growth of credit was observed in building and construction, agriculture and personal loans.
Personal loans and trade accounted for the largest share of credit outstanding, at 30.2 percent and 17.7 percent, respectively.
Net foreign assets of the banking system grew strongly by 17.5 percent in the year ending March 2020 compared with 12.4 percent in February 2020, and a contraction of 6.1 percent in March 2019.
The outcome was largely on account of increase in foreign asset holding of the Bank of Tanzania, through purchase of foreign exchange from the central government and banks.
