BoT: Economy records impressive growth

DAR ES SALAAM: THE central bank, through its Monetary Policy Committee (MPC), said yesterday that the country’s economic growth improved last year, thanks to the government’s initiatives to promote economic stability.

The committee revealed that in the third quarter, the country’s economy grew by 5.3 per cent, and it is estimated to reach 5.4 per cent in the fourth quarter.

Additionally, the committee noted that until the end of this year’s first quarter, Tanzania Mainland’s economy is projected to grow by 5.2 per cent.

Bank of Tanzania (BoT)’s Governor Mr Emmanuel Tutuba said due to the  increased  production in various sectors and  improvement of the business environment, the estimated growth of five per cent for the year 2023 was able to be  reached.

“This trend is due to the increased production in various sectors due to the improvement of the business environment and government investment especially in infrastructure,” said Mr Tutuba.

Additionally, Zanzibar’s economy grew by 7.0 per cent, thus the expected growth of 7.1 per cent of last year has also been reached.

Furthermore, Mr Tutuba said inflation has continued to decrease to three per cent until December last year, down from 3.2 per cent of the preceding year, while in Zanzibar, inflation has decreased to 5.5 per cent from 8.1 per cent.

“The growth situation was due to the implementation of the financial and budgetary policy and the food sufficiency in the country,” he added.

He noted that the inflation level is estimated to remain subdued at around 3.2 per cent in the first quarter of this year.

“However, this situation may change if the countries from the Organisation of the Petroleum Exporting Countries (OPEC+) implement their decision to reduce oil production. In addition, the ongoing political conflicts in the Middle East and the war between Russia and Ukraine can contribute to the situation,” he said.

The governor said volume of money in the circulation decreased in the last quarter of 2023 to reach 14.1 per cent, but remained above the annual target of 10.1 per cent.

Furthermore, the growth of private sector loans continued to be strong, reaching 17.1 per cent compared to the estimate of 16.4 per cent for the year.

“This situation resulted from the implementation of a monetary policy aimed at controlling inflation indicators and contributing to strengthening the value of the shilling against foreign currencies,” emphasised Tutuba.

Regarding the financial sector, the governor said that it has continued to improve where the banking sector had sufficient liquidity and capital with deposits and loans continuing to increase.

Additionally, non-performing loans (NPLs) continued to decrease to 4.3 per cent until last December, from 5.8 per cent of the prior year. The rate was below the target of 5.0 per cent.

According to the governor, the situation indicates a decrease in credit risks due to the improvement of the economic environment, with efforts being made to address those that emerge.

Regarding the implementation of the budget, Mr Tutuba said it was satisfactory, and in the first half of 2023/24 financial year the government revenue collection reached 96 per cent of the target for Tanzania Mainland Tanzania while in Zanzibar, the collections reached 99.1 per cent of the target.

He said the success was due to improvement in revenue collection system, management and the implementation of voluntary tax payment strategies. Revenue is expected to continue to increase due to measures taken to increase the scope and tax management.

Tutuba also said that the foreign sector continued to improve, despite being faced with challenges arising from the trend of the world economy. The foreign trade balance deficit decreased due to the increase in tourism activities and the export of goods.

He said foreign currency reserves have continued to be sufficient, reaching some 5.5 billion US dollars at the end of December 2023.

Moreover, he noted that the value of the shilling against the US dollar remained stable, decreasing by 7.8 per cent per year. The export sector is expected to continue to improve in the first quarter of 2024.

As for the world economy, Tutuba said the growth was not satisfactory in the last quarter of 2023, attributed to the ongoing political conflicts in the Middle East and the war between Russia and Ukraine.

He said the implementation of monetary policy aims to reduce liquidity, especially in developed countries, and the unpredictability of the global economic environment is expected to reduce the pace of global economic growth.

Regarding the prices of products in the world market, he said they decreased in the last quarter of 2023 compared to the same period last year, a situation that resulted from the increase in the availability of products.

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