DOMESTIC credit from the banking system in net terms grew by 15.2 percent in the year ending September compared with 4.0 percent in September last year driven by the expansion of credit to the private sector.
The Bank of Tanzania (BoT) monthly economic review for October shows that private sector credit grew by 9.3 percent, up from 8.2 percent in the year ending August and 4.9 percent in September last year.
The improvement was largely a reflection of accommodative monetary policy and improvement in asset quality of banks owing to a reduction of non-performing loans (NPLs) and ongoing measures to improve the business environment in the country.
Furthermore the credit to the central government contracted by 7.7 percent compared to an annual growth of 4.2 percent and 19.3 percent recorded in preceding month and September last year, respectively.
The contraction resulted from redemption of government securities and build-up of central government deposits at the Central Bank following imAirtel proved revenue collection.
Private sector credit to all major economic activities improved in the year ending September 2019, except for trade, and hotels and restaurants activities.
Loans to personal-related activities and trade accounted for the largest share of credit outstanding, holding 29.9 percent and 17.4 percent of total outstanding credit to the private sector, respectively.
Steady growth of money supply was sustained in September in response to accommodative monetary policy and improving credit conditions manifested by private sector credit growth.
Extended broad money supply grew by 9.4 percent compared with 8.2 percent in August 2019 and 7.5 percent in September last year.
Broad money supply which excludes foreign currency deposits in measuring money supply, grew at an annual rate of 9.8 percent in September compared with 11.4 percent in the preceding month and 7.2 percent in the corresponding period in 2018.
The broad money supply which is the intermediate target variable in the conduct of monetary policy, is projected to grow by 10.0 percent in the year ending June 2020.