Credit to private sector on upward trend

PRIVATE sector credit continued to record strong growth at 21.2 per cent in the year to June, mainly due to improved business conditions.

According to the Bank of Tanzania (BoT) monthly economic review for June this year, also additional policy measures that were instituted by the Bank to stimulate cost-effective credit growth and supportive fiscal policy.

The rate was slightly above the 19.4 per cent registered in the corresponding period last year. Credit for agricultural activities continued to record the highest growth at 40.6 per cent although was slightly down compared to 40.9 per cent in the year ending June last year.

Transport and communication credit declined to 22.1 per cent in the period under review compared to 26.7 per cent registered in the corresponding period last year.

Credit extended to trade activities increased to 21.5 per cent in the year ending June compared to 16.4 per cent recorded a year before.

Building and construction credit rose to 21.1 per cent in the reference period from 14.4 per cent posted in the corresponding period last year.

Personal loans, which are largely utilised for personal undertakings – primarily small and medium enterprises, accounted for a significant share of the total credit, remained the major contributor to credit growth, followed by trade, manufacturing and agricultural activities.

During the period under review, credit for personal loans declined 20.5 per cent compared to 23.5 per cent posted in the similar period last year.

Manufacturing activities credit increased to 14.1 per cent during the period compared to 11.4 per cent registered in the corresponding period last year.

The credit to mining and quarrying activities rose slightly to 6.6 per cent in the period under review compared to 5.5 per cent recorded in the year before.

According to the bank report, hotels and restaurants credit was negative 2.8 per cent in the reference period compared to negative 2.3 per cent in the same period last year.

In June this year, the bank maintained a less accommodative monetary policy stance to contain the impact of global shocks while safeguarding economic growth and financial stability.

The policy stance also aimed at maintaining the desired level of shilling liquidity in the economy to reduce domestic demand pressure on foreign currency.

Extended broad money supply recorded an annual growth of 18.8 per cent, compared with 6.5 per cent in the corresponding period last year primarily due to continued strong private sector credit expansion.

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