TANZANIA: Stockbrokers have asked the Bank of Tanzania (BoT) to reassess its less accommodative policy as some of the economic parameters were taking the opposite direction.
The stock brokers’ comments come in the wake of the declining money supply growth by half in the last four months while private sector credit growth recorded its lowest level since last May.
“With a stable inflation way less than the target, while money supply growth has almost halved in the last four months and private sector credit growth at the lowest level since May last year the central bank’s less accommodative policy is put back to question as the initial phase of the monetary policy for the fiscal year 2023/24 comes to an end of this month,” the Head of Research and Analytics from Alpha Capital Mr Imani Muhingo said Dar es Salaam on Monday.
He added, “We wait to see the movement in Treasury yields in the coming auctions,”
On his part, Zan Securities Limited Chief Executive Officer, Raphael Masumbuko said in the Weekly Wrap-Up that the prevailing tight liquidity conditions have prompted aggressive pricing in fixed income.
“With only two Treasury bond auctions remaining for the year ending on December 31st, we predict that the 10-year auction scheduled for December 13, 2023, may experience undersubscription, receiving only a 30 per cent subscription.
This could further drive yields higher on the short to medium end of the yield curve.
However, for the 25-year T-bond auction scheduled for December 27 this year, we anticipate a slightly improved performance with potential full subscription, albeit with weighted average yields around 14.5 per cent,” he said.
According to the BoT monthly economic review for November, the credit extended to the private sector continued to display a downward trend the path observed since last February.
Credit to the private sector grew by 17.9 per cent last month from 19.5 per cent and 23.7 per cent in September and October last year, respectively.
The extended broad money supply continued to slow down reflecting a less accommodative monetary policy stance pursued by the Bank.
The slowdown was also influenced by fiscal consolidation.
In last October, the year-on-year growth of money supply moderated to 12.4 per cent from 14.5 per cent in last September and 13.3 per cent in the same month last month largely explained by a slowdown of private sector credit growth.
Notwithstanding the decline, the registered growth was above the projection of 16.4 per cent by the end of this month.
Improving economic activities from the effects of Covid-19 and measures to improve access to credit economic activities, including agriculture, explain the outturn.
In last October the credit extended to construction activities registered the highest growth at 37.3 per cent, followed by agriculture at 34.6 per cent.
On the other hand, personal loans continued to account for the largest share of outstanding credit at 38.1 per cent, followed by trade at 14.1 per cent and agriculture at 9.8 per cent.