THE Bank of Tanzania (BoT), intensified monetary policy easing measures in the quarter ended March to cushion the economy from the adverse impact of Covid-19.
According to the Bank of Tanzania (BoT), Economic Bulletin for the quarter ending March liquidity in the banking system remained adequate and growth of money supply was fairly high.
Dur- ing the period, the extended broad money supply grew at an annual rate of 9.9 percent in March up from 9.6 percent recorded in December 2019 and 5.0 percent in March 2019.
Broad money supply grew by 10.8 percent, com- pared with 11.8 percent in the year ending December 2019, and higher than 4.4 percent registered in the year ending March 2019.
Net foreign assets of the banking system grew at an annual rate of 17.5 percent in March 2020, compared with a growth rate of 13.2 per- cent in December 2019 and a contraction of 6.1 percent in March 2019.
The outcome was largely due to increase in foreign cur- rency holdings of the Bank of Tanzania, following purchase of foreign exchange from banks and public institutions.
Total domestic credit by the banking system, grew by 6.5 percent in the year end- ing March 2020, mostly ex- plained by expansion of credit to the private sector. Credit to the private sector recorded an annual growth of 8.6 percent in March 2020, compared to 11.1 percent registered in December 2019 and 9.6 percent recorded in the corresponding period of 2019.
The growth of credit to the private sector resulted from increased supply of loanable funds, partly due to accommodative monetary policy coupled with measures implemented to reduce non- performing loans.
Credit extended by banks was more pronounced in building and construction, agriculture and personal-related activities.
Personal-related activities mostly for small and medium enterprises, and trade continued to account for the largest share of outstanding credit to the private sector, at 30.2 percent and 17.7 per- cent, respectively.