On 12th May 2020, the Bank of Tanzania (BOT) revealed in a statement the various policies approved by the Monetary Policy Committee (MPC) to cushion the economy from the adverse effect of Covid-19.
The aim of the measures is to safeguard the financial sector stability and continue facilitating the financial intermediation process.
The policy measures approved include:
-Lowering the Statutory Minimum Reserves (SMR) requirements from 7% to 6% to provide additional liquidity to banks.
-Reducing the discount rate from 7% to 5% to permit banks to borrow from the BOT at a lower cost, thus signaling lower lending rates.
-Reducing haircuts on government securities from 10% to 5% for Treasury bills, and from 40% to 20% for Treasury bonds, to increase the ability of banks to borrow from the BOT with less collateral.
-Increasing mobile money operators daily transaction limits to costumers, from TZS 3 million to TZS 5 million and daily balance from TZS 5 million to TZS 10 million, to encourage digital transactions thus reduce congestion in banking premises.
-Promoting loan restructuring by providing regulatory flexibility to banks.
The BOT also informs that Tanzania has adequate foreign exchange reserves for importation of goods and services, but reminds the public that all transactions between residents should be conducted in TZS.
