Tanzania’s Central Bank, BoT, Slashes Discount Rate To Ease Credit Policy

April 17, 2023 8:11 pm18 commentsViews: 283

Bank of Tanzania (BoT) has slashed down the discount rate by 4 percent and with immediate effect the new rate is now 12 percent.

This is a major policy stance by the central bank since President John Magufuli came to power in November 2015.

In 2016 the government ordered transfer of all the deposited fund in commercial banks by ministries, public corporations and local government authorities to BoT and this pumped about Sh500 billion in the economy.

The private sector has been crying long to ease up such tight policy.

According to Professor Delphin Rwegasira from the University of Dar es Salaam’s economics department, the BoT is last-resort lender and now it has called up the commercial banks for less expensive credit.

He added, “It’s a signal of easing monetary policy and we hope this will help boosting money supply, credit expansion and encourage the commercial banks to lend at lower rates.”

The professor continued the move is a good towards easing the tight policy.

An executive from a commercial bank said the new BoT move would improve liquidity in the country and it will also simultaneously reduce the cost of funding in commercial banks.


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