PRIVATE sector credit expanded by 8.2 percent in the year ending August which is higher than 5.2 percent registered in the corresponding period 2018 on account of the accommodative monetary policy geared at improving business environment.
The Bank of Tanzania (BoT) monthly economic review for September shows that domestic credit, comprising credit to the private sector and central government by the banking system namely the central bank and commercial banks, grew by 7.5 percent in the reference period compared with 5.8 percent in the corresponding period.
Credit to the central government by the banking system grew by 4.2 percent, significantly lower than 8.6 percent in August 2018, mainly due to a decline in government securities held by banks.
The stock of credit outstanding to major economic activities increased, with exception of transport and communication, and hotels and restaurants subgroups.
Credit to agriculture increased at a faster rate, followed by building and construction, and mining and quarrying sub-groups.
In terms of absorption of bank credit by economic activities, outstanding loans for personal-related activities and trade remained dominant, accounting for 29.5 percent and 18.2 percent of the total credit outstanding, respectively.
Money supply growth continued to pick up in response to accommodative monetary policy and measures taken to expand credit to the private sector.
In August 2019, extended broad money supply grew at an annual rate of 8.5 percent. This was slightly slower than 9.0 percent in July 2019, but higher than 6.6 percent in August 2018.
The growth of money supply in line with projected growth of 10.0 percent in the year ending June 2020.
Broad money supply a measure of money supply that excludes foreign currency deposits, grew by 11.4 percent, close to 11.7 percent in July 2019, but much higher compared with 6.5 percent in the year ending August 2018.