BOT CUTS DISCOUNT RATE TO 7PC TO SPUR GROWTH

The Bank of Tanzania (BoT) has cut its discount rate to 7 per cent from 9 per cent effective Monday this week to boost credit growth.

It said in a circular to commercial banks that the review reflected continued to promote credit growth for supporting economic activities.

It comes as private sector credit growth has steeply declined in the past two years. A year ago, the BoT cut its discount rate from 12 per cent to 9 per cent.

“This review reflects the continued need to promote credit growth for supporting economic activities,” the statement said.

The revised discount rate has also taken into account the prevailing monetary policy stance and recent development in the 91-day and 182-day Treasury bills yields.

The discount is meant to be passed on to the customers by lowering commercial banks’ lending rates that have declined from 22 per cent to an average rate of 17 per cent this year.

Bank Lending Rate in Tanzania decreased to 16.01 per cent in May from 16.23 per cent in April of 2018.

The lending rates averaged 12.72 per cent from 2003 until 2018, reaching an all time high of 17.91 per cent in September of 2017 and a low record of 7.53 per cent in March of 2004.

BoT June Monthly Economic Review showed that annual growth of credit to the private sector continued to recover reaching 2.6 per cent in May from 0.8 per cent in April, with personal loans taking the lead.

This year commercial banks reduced lending rate for salaried workers from 22 per cent to 16 per cent after government securities yield rate plunged to almost single digit.

Daily News