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BoT upbeat to support private sector credit expansion

BoT upbeat to support private sector credit expansion

THE Monetary Policy Committee (MPC) has agreed with the Central Bank on the proposal to sustain liquidity easing monetary policy in September and October this year in support of credit expansion to the private sector.

This, according to the Monetary Policy Committee Statement is based on an assessment of the recent performance and optimism for further recovery of domestic and global economies.

The MPC met on Monday to review the conduct of monetary policy and economic performance in the recent past and the general economic outlook.

The statement said, “The recovery is also supported by ongoing implementation of measures to improve the business environment and normalization of global trade and investment,”

The economies are expected to continue improving, owing to ongoing public investment and normalization of the global economy which will increase private sector investment and trade.

The MPC noted that the global economy continues to recover from the Covid-19 pandemic, albeit at a slow pace, but is expected to gain momentum in future.

The performance of Tanzania Mainland and Zanzibar economies was satisfactory in the first quarter this year.

The growth in the Mainland was 4.9 per cent, lower than 5.9 per cent in the corresponding period last year driven by construction, transport, agriculture, manufacturing and mining and quarrying activities.

The Zanzibar economy grew at 2.2 per cent, slightly lower than 2.5 per cent registered in the first quarter this year.

Private sector credit growth improved, though the pace was slow at a rate of 4.1 per cent in July compared to 3.6 per cent in the preceding month, and is expected to continue recovering owing to additional policy measures taken by the BoT in July this year.

According to the MPC statement, the conduct of monetary policy in July and August this year contributed to keeping liquidity adequate in banks with overnight interbank interest rates ranging from 3-5 per cent.

During the period, foreign exchange reserves remained adequate, amounting to 5.5 billion US dollars which is sufficient to cover about 6 months of imports, in line with the country and regional benchmarks.

Money supply growth was 11 per cent in the year ending July this year broadly in line with the targeted average growth of 10 per cent for 2021/22.

The inflation ranged from 3-5 per cent, as targeted and is projected to remain within that target. Performance of the external sector of the economy continued to face challenges caused by Covid-19, particularly tourism, however, export of gold improved to about 3 billion US dollars in the year ending July this year.

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