THE Bank of Tanzania (BoT) has cut its discount rate to 7 per cent from 9 per cent effective today 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.
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