The latest statement of the Monetary Policy Committee (MPC) of the Bank of Tanzania (BoT) states that the Tanzanian economy will sustain the previously projected growth of 5.5% in 2020.
The MPC is satisfied that the economy continues to perform well despite spillover effects from the global economy due to COVID-19.
The MPC further indicates that macroeconomic indicators have continued to remain stable and within agreed regional ranges.
Tanzania’s inflation has remained low, averaging 3.3% in July-August 2020, and is forecasted to range between 3-5% in 2020/21.
The projection is underpinned by adequate domestic food supply, stable exchange rate, moderate oil prices, and prudent monetary and fiscal policies.
Foreign exchange reserves remained adequate, above USD 5 billion and covering about 6 months of import, and the current account deficit narrowed in the year ending August 2020, owing to increase in exports, particularly gold and cashew nuts.
Similarly, the level of liquidity in the economy remained adequate and interest rates declined, albeit slightly.
Private sector credit growth was strong notwithstanding challenges on global supply chains attributable to COVID-19.
Annual growth of private sector credit was 6.8% in August 2020, higher than 5.5% in June and July 2020.
The MPC projects that private sector credit will grow by 11.6% in 2020/21, given the supportive monetary condition and resumption of economic activities.
The banking sector remained sound, stable, and resilient with enough liquidity and adequate capital to support economic activities.