BoT to lessen accommodative monetary policy in December
The Central Bank will continue to lessen accommodative monetary policy measures in December to curb growing inflation and safeguard growth of economic activities.
The Central Bank’s Monetary Policy Committee (MPC) which sat on Monday said in a statement that it was satisfied with implementation of monetary policy and performance of the domestic economy which is facing challenging global environment.
Specifically the MPC observed that the manner in which monetary policy was implemented and its outcome were consistent with the plan.
Liquidity in the banking sector was maintained at desired levels consistent with inflation forecast and monetary policy targets for the quarter ending September 2022 were successfully met.
The MPC noted the performance of the economy was on track. Growth in Mainland Tanzania was 5.2 per cent in the first half of 2022 and the likelihood of realising projected growth of 4.7 per cent for the whole year is high.
It said Zanzibar economy grew at 5.8 per cent in the first half of 2022 consistency with the projections of 5.4 per cent for 2022.
It noted that inflation remained moderate, slowly rising due to increase in prices of food and energy. In Mainland Tanzania it reached 4.9 per cent in October 2022 up from 3.8 per cent in July 2021 but was consistent with the 5.4 per cent target for 2022/23.
“Zanzibar on the other hand, inflation rose to 7.3 percent from 2.2 percent, also broadly in line with the target of 5 percent. Inflation is forecast to remain moderate and consistent with the target in 2022/23,” the statement further reads.
On the other hand, money supply and private sector credit growth was on course. Money supply recorded 13.4 percent growth in October 2022, broadly consistent with the target of 10.3 percent for 2022/23.
The Governor revealed that the private sector credit growth was high in September and October 2022, at 22 and 23.7 percent, respectively. In 2022/23, private sector credit growth is projected at 10.7 percent.
Also, the revenue performance was broadly on track in the first quarter of 2022/23. In Mainland Tanzania, revenue was 96 percent of the target, while in Zanzibar it was 98.5 percent.
Comparatively, expenditure was also on track, consistent with the rising needs to address the effects of global shocks and infrastructure gap.
“The external sector of the economy remained sustainable but continued to be undermined by global supply-side shocks, which include high import prices and tightened financial conditions.
Foreign reserves remained adequate, covering 4.2 months of imports, in line with the country benchmark of 4 months. The import cover is expected to increase, as world market prices of imports decline,”
And, the banking sector performance was satisfactory as it remained liquid, capitalised, and profitable. Likewise, deposits and assets are increasing and asset quality is improving.
The governor pointed out that the non-performing loan ratio declined to 7.2 percent in October 2022, down from 8.3 percent in the corresponding period in 2021.
The Bank of Tanzania implemented an accommodative monetary policy in 2021/22 to facilitate recovery of economic activities from adverse effects of COVID-19 pandemic.
ENDS/ Winfrida
