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Tanzania central bank lowers reserve requirements due to coronavirus

NEWS
By Reuters | May 12th 2020

Tanzania’s central bank lowered the statutory minimum reserves requirements for commercial banks to 6 per cent from 7 per cent and cut its discount rate for banks, to cushion the economy from the effects of the coronavirus crisis, it said on Tuesday.

The reduction of the reserves will come into effect on June 8 to provide additional liquidity to banks, governor Florens Luoga said in a statement.

The bank also cut its discount rate for lending to banks to 5 per cent from 7 per cent to “provide additional space for banks to borrow from the Bank of Tanzania at a lower cost, thus signalling lower lending rates by banks.”

The central bank will reduce haircuts on government securities to 5 per cent from 10 per cent for Treasury bills and to 20 per cent from 40 per cent for Treasury bonds to allow lenders to access funding from the central bank “with less collateral than before”, Luoga said.

Lenders will also be provided with “regulatory flexibility”, so they can change the terms of loans for borrowers who might fall into distress due to the crisis, the central bank said.

Tanzania has confirmed 509 cases of the coronavirus, with 21 deaths, according to the World Health Organization.

However, the government has been criticised for not providing regular updates on the spread of the outbreak, and the opposition has accused it of being secretive.

Tanzania launched an investigation after samples taken from a goat and a pawpaw tested positive for the new coronavirus, prompting President John Magufuli to question the efficacy of tests.

The WHO and the Africa Centres for Disease Control and Prevention disputed Magufuli’s assertion.

The International Monetary Fund expects Tanzania’s economic growth to slide to 2 per cent this year, from 6.3 per cent in 2019.

Covid 19 Time Series

 

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