AfricaPress-Tanzania: THE Bank of Tanzania (BoT) has said private sector credit growth averaged 5.1 per cent in the last six months of 2020 and is expected to regain momentum in the second half of this fiscal year as the global economy normalises.
According to the Central Bank’s Monetary Policy Committee (MPC) Ordinary Meeting held last week decided upon the Bank to continue with accommodative monetary policy to facilitate growth through credit to the private sector.
The MPC considered efforts made by the bank to expand credit to the private sector and reduce lending interest rates, and urged to continue engaging stakeholders to succeed in this endeavour.
The MPC also approved the bank to auction Treasury bills and bonds for government budgetary operations in accordance with the 2020/21 government Issuance Plan.
The MPC observed that, since its previous meeting, the economy continued to demonstrate satisfactory performance, despite global spillover effects of Covid-19.
In the first half of the year 2020, growth averaged 4.9 per cent, largely driven by construction, agriculture, transport and mining and quarrying. Inflation remained low in the last six months of 2020, ranging from 3.0 to 3.3 per cent, attributable to adequate food production and supply, low oil prices, and stable exchange rate.
The external sector sustained satisfactory performance, bolstered by exports, particularly gold, crops, and manufactured goods.
The foreign reserves remained adequate, covering more than 5.6 months of imports. The performance of government fiscal operations was on track, with improving tax revenue.
The MPC noted that, implementation of accommodative monetary policy succeeded in lowering short-term interest rates, thus creating favourable conditions for increase in trade and investment. The banking sector remained profitable and adequately capitalized, with capacity to withstand shocks.
In the context of the recent performance in key areas of the economy, the MPC observed that growth projection of 5.5 per cent in 2020 will be realized, and strong growth of around 6 per cent or more is expected in 2021.
Inflation is expected to remain within the projected band of 3-5 per cent, as upward inflationary pressures remain muted. Based on projected favourable macroeconomic conditions hereto, the exchange rate is expected to remain stable.
