Tanzania Daily News (Dar es Salaam)

Tanzania: Bot's Monetary Policy Harmers On Broad Money Supply

TIGHT monetary policy stance adopted by the Bank of Tanzania (BoT) impacted heavily on the growth of extended broad money supply and consequently narrowing credit to the private sector.

The Bank of Tanzania (BoT) monthly economic review for November, last year show that the annual growth of extended broad money dipped to 11.1 per cent compared to 21.1 per cent recorded in the corresponding period in 2011.

"Deceleration in the growth of extended broad money supply contributed largely to the contraction of the net foreign assets of banks, slow down of net government borrowing from banking system as well as credit to private sector," stated the BoT report.

The Net foreign assets of banks grew by 37.6 per cent in November 2012 higher than the growth rate of 31.6 per cent corresponding period a year earlier. On net basis, the government borrowed 328.5bn/- from the banking system, compared to 782.3bn/- recorded in the preceding period a year before.

In the meantime, annual growth of private sector credit in the period under review grew by 15.7 per cent down from 30.3 per cent recorded documented in the 2011. "The development was reflected in the growth of credit to major economic activities except for the growth of credit to building and construction and trade activities," stated the bank report.

Meanwhile, the overall time deposit rate increased to 8.40 per cent, from 8.29 per cent in October 2012 and 6.74 per cent registered in November of the previous year, partly reflecting deposits mobilization efforts and increased competition among commercial banks.

Development in lending rates was divergent across different maturities where the overall weighted average lending rate was 16.05 per cent in November 2012, compared to 16.44 per cent of the preceding month and 14.13 per cent recorded in the corresponding period in 2011. The spread between 12-month deposit rate and one year lending rate narrowed to 5.08 per cent in November 2012 from 5.47 per cent recorded in November a year earlier.

Ads by Google

Copyright © 2013 Tanzania Daily News. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.