According to the Bank of Tanzania (BoT) monthly economic review, the outstanding performance of credits extended to the private sector is explained by the slowdown in net government borrowing was primarily explained by improved revenue collection.
During July, the government borrowed 441.3bn/- from the banking system compared with 1.19tri/- in the year ended June 2013.
In the period under review, the private sector credit extended to major economic activities grew relatively higher than the corresponding period in 2013, except for building and construction that slowed 32 per cent from 42 per cent.
Trade and personal activities accounted for the largest share of outstanding private sector credit by 21 per cent from 18.9 per cent followed by manufacturing activities that rose by 26.4 per cent from 14.1 per cent.
Agriculture which is the main economic activity in the country registered a share of 10 percent of the outstanding private sector credit.
Furthermore, private sector contracted loans amounting to 15.6 million US dollars. During the period, loans contracted amounted to 779.3 million US dollars, of which 258.3 million US dollars were contracted by the government and 521 million US dollars by the private sector.
Disbursements during July 2014 amounted to 22.9 million US dollars, out of which 12.4 million US dollars was made to the government and 10.5 million US dollars to the private sector.
The annual growth of extended broad money decreased to 12.9 per cent in July 2014 from 16.9 per cent in July 2013. The decrease occurred mostly in transferable deposits which grew by 5.8 per cent compared with 24.7 per cent in July 2013.
In terms of money supply sources, the decline in money supply growth was largely driven by slowdown in the net government borrowing from the banking system.
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