Home Business & Finance Commercial Banks in Tanzania to Cut Lending Rates

Commercial Banks in Tanzania to Cut Lending Rates

Commercial Banks in Tanzania to cut lending rates

Commercial Banks in Tanzania to cut lending rates

Source : Flickr/César González Palomo

In an attempt to help credit growth in Tanzania, the country’s central bank has asked the commercial banks to lower the interest rate after Bank of Tanzania cut its discount rate to 12 percent from 16 percent effectively from March 6. Last year, the country saw a significant drop in the private-sector credit growth and the recent move should help the economy.

In an official statement released earlier on Friday, central bank Governor Benno Ndulu said that there are certain expectations that the move for lower rate will enhance credit growth and reduction in lending rates.

These policy changes are coming after the country’s private sector grew only by 2.5 percent in 2016 after expanding 26.8 percent a year earlier, according to official data. Few weeks earlier in January, IMF warned that tight fiscal and monetary policies threatened Tanzania’s forecast for growth of around 7 percent in fiscal year 2016/17. With the current fiscal year set to end in June, it will be worthwhile to see if the policy changes help the country to increase the growth during this time period.

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