BANK of Tanzania (BoT) has said the growth in private sector credit is expected to strengthen in the wake of sustained monetary policy easing, an initiative that will increase credit flow to stimulate economic activities.
The BoT monthly economic review for May shows that the annual growth of credit to the private sector remained positive at 0.7 per cent in the year to April compared with 3.5 per cent and 1.2 per cent in April last year. During the period under review, the total domestic credit by the banking system which comprises credit to the government and private sector contracted by 2.5 per cent compared with a decline of 0.3 per cent in the year ending April last year and growth of 1.1 per cent in the previous month.
Bank's net credit to the government which is mirrored in the bank's holding of government securities grew by 15.9 per cent in April, year-on-year, compared with 14.8 per cent and 19.6 per cent in the corresponding period and preceding month, respectively. Personal loans and credit to mining and quarrying, building and construction and hotels and restaurants remained positive, albeit growing in a subdued manner.
Personal loans recorded the highest growth partly because of reclassification of salaried loans that previously were considered as part of loans to other services in favour of health and education. In terms of shares to outstanding credit to the private sector, personal loans and trade activities continued to hold the largest share in the outstanding credit at 27.4 per cent and 20.7 per cent, respectively.
Net foreign assets of the banking system grew strongly at 34.1 per cent in period under review compared with 29.7 per cent and 7.2 per cent in the year to March this year and April last year respectively.
Much of the increase reflected in foreign assets of the BoT following receipt of more foreign exchange in favour of the government than in the corresponding period last year. Annual growth of money supply extended broad money supply lowed to 7.0 per cent in April compared with 8.4 per cent in the preceding month, but was almost two fold the 3.8 per cent registered in April last year.