CREDIT extended by banks to the private sector grew by 4.8 per cent, a positive recovery from 2.3 per cent in the preceding month, but slightly below 5.8 per cent registered in the corresponding period last year.
According to the Bank of Tanzania (BoT) monthly economic review for May, the recovery of credit to the private sector is attributed to the supply of loan able funds consistent with sustained monetary policy easing.
Other factors that contributed to the credit recovery are the ongoing implementation of measures to improve the business environment and easing lockdown restrictions.
Domestic credit, extended to the private sector and central government, grew at an annual rate of 12.9 per cent in April higher than 10.6 per cent and 4.4 per cent in March and April last year, respectively.
Meanwhile, credit extended to the central government, through the purchase of government securities, grew by 5.6 per cent and remained within the borrowing limit outlined in the 2020/21 government budget.
Economic activities that recorded strong growth of credit from banks were personal activities (largely representing lending by banks to micro, small and medium enterprises), followed by agriculture, and hotels and restaurant. In terms of shares of the outstanding stock, personal activities continued to account for the largest share, followed by trade and manufacturing activities.
Furthermore, the money supply responded positively to the sustained implementation of accommodative monetary policy.
Accordingly, extended broad money supply grew at an annual rate of 7.8 per cent in April 2021, compared with 6.8 per cent and 12.2 per cent in the preceding month and the corresponding period of 2020, respectively.
The Broad money supply grew by 7.1 per cent compared to 9.3 per cent in the preceding month and 13.9 per cent in the corresponding period last year.