Low growth of credit to the private sector coupled with contraction in Net Foreign Assets (NFA) of banks contributed largely to decline of an annual growth of extended money supply to 13.5 per cent in February 2013 from 16.3 per cent of the previous year.
Bank of Tanzania (BoT)
The year ending February, this year, recorded an annual growth of credit to the private sector of 17.9 per cent, compared with 24.3 per cent recorded in the corresponding period of 2012.
The Bank of Tanzania (BoT) monthly economic review shows that NFA of banks contracted by 35.2 per cent, compared to a growth of 10.3 per cent recorded in the year ending February 2012, partly because of the stability of the shilling against the US Dollar.
During the period under review, net government borrowing from the banking system was 618.6bn/-, compared to 876.2bn/- recorded in the corresponding period of 2012. The decline in government borrowing reflects improved revenue collections coupled with prudent expenditure management.
Also the year ending February 2013 witnessed credit to the private sector increasing by 1.39tri/-, compared to a rise of 1.52tri/- recorded in the previous corresponding period. The period under review saw all economic activities recording lower growth of credit when compared to the corresponding period of 2012, with the exception of manufacturing.
The amount extended to the manufacturing sector in the period ending February was 16.5bn/-, compared to only 5.3bn/- in the preceding month and 9.1bn/- of the previous year. Agricultural sector that employs over 70 per cent of the population saw a declining amount of credit from commercial bank to 4.7bn/-, down from 13bn/- of the month of January and 20bn/- disbursed in the year ending February 2012.
The amount extended to the building and construction sectors increased slightly to 34.2bn/- up from 29.9bn/- recorded in January and 76.3bn/- of the year before. Meanwhile, a large portion of banks’ credit continued to be held in trade followed by personal activities. During this period, a total of 24.6bn/- was disbursed compared to 25.1bn/- of the preceding month and 43.1bn/- of the year ending 2012.
