Tanzania: Interbank Rates Up By 4 Pc in Week's Time

 

THE interbank rate rose by 2 basis points (bps) to 4.0 per cent in seven days to last Friday, pushed up by an uptake in loans from the public.

The weekly rise, according to some analysts, was the result of volume growth band for the fourth consecutive week.

The Orbit Securities Limited said in a week Market Synopsis that the rates were pushed by increasing loan demand to cause a 'fairly tightening liquidity' in the banking sector.

"The weekly rise takes the volume growth streak to a fourth consecutive week, and similarly a growth in the interbank rates marking a fairly tightening liquidity in the banking sector which may be caused by an uptake in loans from the public," Orbit said.

The value of transactions on the Interbank Cash Market (IBCM) rose by 13 per cent week on week to a total of 62bn/- compared to 54.9bn/- during the previous week.

The Bank of Tanzania (BoT) said annual growth of the private sector credit was 6.8 per cent in August, higher than 5.5 per cent in June and July this year.

"Private sector credit growth was strong, notwithstanding challenges on global supply chains attributable to Covid-19," BoT said in its Monetary Policy Committee (MPC) statement.

The MPC maintained the view that the private sector credit growth will grow by 11.6 per cent in 2020/21, as projected, given the supportive monetary condition and resumption of economic activities.

"The banking sector remained sound, stable and resilient, with enough liquidity and adequate capital to support economic activities," the central bank said.

The MPC observed that external sector developments were becoming increasingly stable, as more countries were abandoning the Covid-19 lockdowns and opening up global economic interactions.

"The global growth is projected to improve in the remainder of 2020, as most countries progressively lift restrictions associated with the pandemic," the MPC statement said.

The central bank said economic activities which contributed greatly to the GDP growth in the past five years were construction, agriculture, mining, quarrying and transportation activities.

These achievements are strongly associated with public investments and crop production owing to favorable weather, stability of power supply and prudent policies.

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