THE Bank of Tanzania (BoT) has said the credit extended to the private sector is projected to remain high in 2020/21 fiscal year despite the challenging environment caused by Covid-19.
The central bank said in its Monetary Policy Statement for June this year that the high credit growth is projected to be bolstered by monetary and fiscal policy measures implemented to cushion the economy from the impact of Covid-19 and normalization of activities that were affected by the pandemic, such as resumption of tourism, sports and entertainment, education, coupled with faster than expected re-opening of economies of trading partners.
The monetary policy implementation was broadly in line with targets for 2019/20, despite facing challenges induced by the impact of Coronavirus on the economy.
As a result, growth rates of monetary aggregates were broadly within targets for 2019/20, driven by accommodative monetary policy measures.
The growth of extended broad money supply averaged 9.9 per cent during July 2019 to April 2020, compared with the target of 10.0 per cent for 2019/20 and 4.9 per cent recorded in the corresponding period of 2018/19.
The broad money grew by 11.4 per cent compared with 5.2 per cent in 2018/19, while average reserve money grew by 7.0 per cent compared with a contraction of 0.4 per cent in 2018/19.
During the period between July last year to April this year, the credit extended by banks to the private sector was strong, averaging at 8.7 per cent compared with 6.5 per cent recorded in the corresponding period of 2018/19.
The strong growth of credit reflects easy monetary policy pursued by the BoT and expansion of investment activities. Much of the share of credit to the private sector was in personal economic activities, trade, manufacturing and agriculture.