By Christian Gaya: HakiPensheni Center.
According to recently BoT Monetary Policy Committee (MPC) meeting which was held on 15th November 2021, states that private sector credit growth improved from 3.2 percent in August 2021 to 4.6 percent in September 2021, in which the MPC was confident of further improvement of credit growth due to the ongoing normalization of the global economy and policy measures adopted by the Bank to promote credit intermediation.
Moreover, the MPC noted
that the conduct of monetary policy in September and October 2021 continued to
maintain liquidity in banks at the required levels.
According to BoT Governor Professor Florens Luoga who is also the MPC Chairperson said that this performance also led to stability of short-term interest rates at low levels.
“Foreign exchange
reserves remained adequate, amounting to USD 6.7 billion at the end of October
2021, sufficient to cover about 7 months of projected imports, consistent with
the country and regional benchmarks,” Professor Luoga said.
Regarding the global
economy, Professor explained that the MPC observed that the pace of growth has
been slightly lower than projected due to resurgence of the COVID-19 pandemic
in some countries and rising energy prices, but still supports Tanzania growth
prospects.
He said that inflation
has generally been rising in many countries, due to increase in demand and
rising energy prices, but central banks view the increase to be temporary,
hence sustaining accommodative monetary policy.
He also explained that
the MPC reiterated that the rising oil prices will turnaround if production
increases, and underscored the need to ensure adequate food supply and maintain
stable exchange rate to partially dampen the impact of high oil prices on
inflation.
Furthermore, Professor Luoga
mentioned that the MPC also discussed regarding the recent performance of
domestic economy and observed that growth in Tanzania Mainland continued to
progressively improve, reaching 4.7 percent in the first half of 2021.
“Inflation remained
within the target of 3-5 percent and in line with EAC and SADC convergence
criteria, despite slowly edging up since June 2021, and is expected to remain
consistent with the targets. Revenue performed satisfactorily, with tax revenue
at more than 90 percent of the target,” Professor Lwoga explained.
Professor Luoga said that
in Zanzibar, growth was 6.5 percent in the second quarter compared to negative
1.4 percent in the corresponding quarter in 2020. Inflation remained low and
consistent with the target of below 5 percent and revenue performance was 73.6
percent of the target.
“The external sector is
improving from the negative effects of the pandemic, sustaining a low current
account deficit, as export proceeds of minerals, cash crops and tourism started
to flow in” Professor Luoga said.
He concluded that, based
on the recent performance of the domestic and global economies, coupled with
inflation outlook remaining within the target, the MPC agreed the BoT to
maintain accommodative monetary stance in November and December 2021 to
facilitate the recovery of the economy.
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