BoT: Construction activities recorded highest growth in January

By Felix Andrew

Bank of Tanzania (BoT)

Building and construction activities have continued to record highest growth in January this year, the Bank of Tanzania (BoT) has said in its Monthly Economic Review for February 2014 released last week.


According to the review, the sectors recorded a growth of 22.3 percent, followed by transport and communication 21.2 percent, manufacturing 19.1 percent, and trade activities 16.2 percent.

The review also said during January2014, commercial banks' deposit rates exhibited a general downward trend, while lending rates increased.
The overall time deposit rates decreased to 8.7 percent from8.8percent registered in December 2013, while overall lending rates increased to 16.2percent from 16.0 percent registered in December 2013.

Short-term lending rates (up to one year) were 14.3percent in January 2014 up from13.8 percent in previous month, while 12-months deposit rates remained broadly unchanged at 11.1percent.

Consequently, the spread between 12-month time deposit rate and one year lending rate widened to 3.1 percentage points from 2.6percentage points recorded in December 2013.

During January 2014, the review said demand for Treasury Bills was much higher compared to the preceding month.

Total demand stood at 427.5bn/- against the supply of 225.0bn/- , in the preceding month, 480.0bn/- was supplied, while the demand stood at 290.1bn/- . In line with high demand, the overall Treasury Bills yields declined to 14.70 percent from 15.20 percent registered in December 2013.

According to the review in the Treasury Bonds market, the bank supplied 55.9bn/- , same as the preceding month, while demand stood at 98.1bn/- , implying an oversubscription of 42.2bn/- .

Owing to the existence of some outlier bids, the bank accepted bids worth 47.6bn/-, consistent to the amount offered in the market.

During the period, the weighted average yield for the 2-year bond increased to 15.1percent from 15.0percent recorded in the preceding auction, while that of 5-yeardecreased to 14.5 percent from 15.4 percent
Total inter-bank cash market transactions decreased significantly during the month under review to 776.9bn/- from 974.6bn/- recorded in the preceding month, with overnight placements remaining dominant accounting for about79.6 percent of total transactions.

The overnight rate increased to 11.4percent in January 2014 from 8.3percent in December 2013. Similarly, the overall inter-bank cash market rate rose to11.6percentfrom 8.6 percent, the review said.

In the Inter-bank Foreign Exchange Market (IFEM), total volume traded stood at USD183.6m up from USD175.8m traded in the previous month. The increase in the volume traded was partly due to seasonal demand for foreign currency. During the period, the bank sold USD106.6m, compared to USD43.8 m sold in December 2013.

The weighted average exchange rate depreciated by 0.6 percent closing at 1,612.2/- per US dollar in January 2014, compared with an appreciation of 0.6 percent in December 2013.

On annual basis, the exchange rate depreciated by 1.7 percent from 1,584.5/- per USD recorded in January 2013.

During the first five months of 2013/14, government budgetary operations recorded an overall deficit of 757.8bn/- , which was financed by both domestic and foreign borrowing.

Central Government revenue (excluding local government authorities’ own sources) was 3,762.6bn/- 85.6 percent of the target for the period with tax revenue accounting for 93.5 percent of total revenue.

Grants received amounted to 737.8bn/- against 1,217.8bn/- projected for the period it said adding that total expenditure amounted to 4,736.4bn/- , of which 75.2 percent was recurrent expenditure and the balance was development expenditure.

In November 2013, domestic revenue (excluding local government authorities’ own sources) amounted to 717.3bn/- or 85.1 percent of the target for the month.

Tax revenue amounted to 675.6bn/- or 85.6 percent of the target and accounted for 94.2 percent of the domestic revenue. Grants disbursed were 34.1bn/- against the projection of 163.4bn/- .

The underperformance in revenue collection was partly explained by delays in implementation of some revenue collection measures, the review noted.
Total government expenditure for November 2013 amounted to 809.2bn/- , equivalent to 56.9 percent of estimates for the month.

Recurrent expenditure amounted to 729.8bn/-, or 81.2 percent of the estimate, while development expenditure was 15.1percent of the estimate. 

SOURCE: THE GUARDIAN