Credit to central government in Tanzania shrinks to 30.5 percent in September 2017

THE Bank of Tanzania (BoT) has said that the strong build up of administration deposits has led to a decline of net credit to the central government.

Credit to central government in Tanzania shrinks to 30.5 percent in September 2017

THE Bank of Tanzania (BoT) has said that the strong build up of administration deposits has led to a decline of net credit to the central government.

07 December 2017 Thursday 08:36
Credit to central government in Tanzania shrinks to 30.5 percent in September 2017

By Azania Post Reporter 

THE Bank of Tanzania (BoT) has said that the strong build up of administration deposits has led to a decline of net credit to the central government.

According to BoT monthly economic review for October 2017, the credit declined by 30.5 percent in the year ending September 2017 compared to an increase of 7.1 percent in the year ending September 2016.

Domestic credit contracted by 8.0 percent during the  year  ending  September  2017  compared  to expansion  of 10.7 percent  in the corresponding period in2016, with most of the decline occurring in  net  credit  to  the  central  government  .  

By  contrast,  central government borrowing from banks increased, reflecting sale of  government  securities for  fiscal  operations Growth   of  credit to  private  sector  remained subdued, despite  monetary  policy easing.  

The credit decreased by shillings  266.5 billion to a stock of  shillings  16,356.3billion at the end of September 2017,  from  shillings  16,622.8 billion  at  the  end  of September  2016  .

A pick up in risk premium following increase in non-performing   loans, slower   growth   of   private deposits, and portfolio diversification in favour of low  risk  government  securities observed  in  the recent   months remained the main reasons behind the developments in credit growth.

Despite the overall decrease in credit to private sector, the review said developments were mixed when  viewed by  individual  activities.  Credit growth  picked  up for manufacturing, building and construction, and hotels  and  restaurants  activities.

In terms  of  share  in  total credit outstanding, trade and   personal   activities remained   dominant, accounting  for 20.7percent  and  17.3percent, respectively.

There  was  a  notable  increase  in growth  of  net foreign  assets  (NFA)  of  the  banking  system—Bank   of   Tanzania and   banks—reducing the impact of decline  in domestic  crediton  money supply, the review noted. 

Specifically, NFA of the banking system grew by34.4percent in September on year-on-year compared  to  a  decline  of  10.7  percent  in September 2016. 

This follows a sustained build-up of foreign exchange by the Bank of Tanzania through purchases from  the inter-bank  foreign exchange market, and receipt  of  external  non-concessional    loan.

On    the    contrary, the downward trend of NFA of banks observed in the recent month was sustained in September 2017, owing to increase in the debt owed by banks to year bond. 

Weighted  average  yield  to  maturity (WAY)   for   2-year   bond   decreased   to   11.76 percent from  12.45  percent in  the  preceding auction, while that of 15-year bond increased to 16.74 percent from and 16.15 percent.

Azania Post

Comments
Avatar
Your Name
Post a Comment
Characters Left:
Your comment has been forwarded to the administrator for approval.×
<strong>Warning!</strong> Will constitute a criminal offense, illegal, threatening, offensive, insulting and swearing, derogatory, defamatory, vulgar, pornographic, indecent, personality rights, damaging or similar nature in the nature of all kinds of financial content, legal, criminal and administrative responsibility for the content of the sender member / members are belong.