BANK of Tanzania (BoT) has said the growth of money supply and private sector credit continued to be satisfactory, thanks to the monetary policy implementation that is geared towards balancing between taming inflationary pressures and supporting economic activities.
According to the BoT’s monthly economic review for December the policy drive was implemented by lessening monetary policy accommodation.
“The implementation of the monetary policy aimed at taming inflationary pressures and supporting economic activities have made the money supply and private sector credit growth become satisfactory,” the BoT report said.
During the period under review, the extended broad money supply grew by 12.7 per cent in line with the target of 10.3 per cent for 2022/23.
Private sector credit growth was strong at 22.6 per cent over a year-on-year basis, almost tripling from 7.8 per cent registered in November 2021.
This reflects improving economic activity and the impact of monetary and fiscal policies executed to limit adverse spillover effects of global supply shocks.
In the preceding month, Private sector credit recorded a year-on-year growth of 23.7 per cent, compared with 5.6 per cent in October 2021 and the target of 10.7 per cent for 2022/23.
Despite declining slightly by almost 1 per cent, the private sector credit performance has continued to be strong and is attributed to the normalisation of economic activities from the Covid-19 pandemic, coupled with supportive monetary policy conditions.
During the reference period, almost all the major economic activities recorded an increase in credit.
Credit extended to the agriculture sector continued to record the highest growth, partly due to monetary policy measures rolled out in July 2021 to support cost-effective credit intermediation to agriculture and agri-business activities.
In terms of share, personal-related activities, trade, manufacturing and agriculture activities remained the major holders of the outstanding loans extended to the private sector by banks.