BOT Issue 2016–2017 Monetary Policy Targets for Sustained Economic Growth

The Bank of Tanzania (BOT) issued its monetary policy targets for 2016–2017 that are in line with the macroeconomic objectives of the Government.

The targets are included in BOT’s June 2016 Monetary Policy Statement recently published.

Tanzania’s Government aims at achieving 7.3% real GDP growth in 2016–2017 while maintaining single digit inflation.

To support such growth, BOT’s 2016–2017 monetary policy targets include 20.5% annual growth of private sector credit, up to 14.8% annual growth of M3 (broad money supply), up to 13% annual growth of average reserve money, and maintaining adequate levels of gross official reserves.

Gross official reserves include BOT’s holdings of external assets, available to the Bank for direct financing of balance of payments.

BOT’s 2016–2017 monetary policy also aims at keeping inflation close to 5%.

Achievement of this target will be supported by low global oil prices, improvement in domestic power and food supply, and continued stability in the value of the Tanzanian Shilling, according to BOT’s report.

Tanzania’s economy grew by 7% in 2015 and 2014 thanks to stability in power supply, moderation in oil price and high growth of credit to the private sector, BOT explains.

The highest growth rates in 2015 were registered in construction (16.8%), information and communication (12.1%), finance and insurance (11.8%).

Annual headline inflation increased to 6.8% in December 2015 from 6.1% in June 2015, however it decreased to 5.1% in April 2016 largely due to tight monetary policy, exchange rate stability and improvement in food supply.