The Monetary policy committee (MPC) of the Bank of Tanzania has said that the economy of Tanzania will rise by 5.5% in 2020.
The team, which is part of the Bank of Tanzania’s board, exuded confidence that the BOT’s accommodative monetary policy was being implemented in such a manner that key macroeconomic indicators remained positive despite the impact of the coronavirus pandemic on the global economy.
“The MPC is pleased that the economy continues to perform well despite spill-over effects from the global economy due to COVID-19. The economy is expected to rise by 5.5% in 2020,” MPC chairman and BOT governor Florens Luoga, said.
The MPC, which met on Monday to assess the performance and outlook for the economy, asked the BoT to continue implementing accommodative monetary policy in a low inflationary environment in the remainder of 2020 in order to further stimulate the growth of the economy and safeguard the stability of the financial sector.
Prof Luoga said the MPC was satisfied that the government’s fiscal policy implementation was on and that expenditure remained streamlined towards infrastructure projects and improved mobilization of revenue.
At the same time, inflation has remained low, averaging 3.3 percent in July- August 2020, and will range between 3-5 percent in 2020/21, as earlier projected.
The projection underpins sufficient domestic food supplies, stable exchange rates, moderate oil prices and prudent monetary and fiscal policies. Foreign exchange reserves remained adequate, above USD 5 billion, and covering about 6 months of import, and the current account deficit narrowed in the year ending August 2020, owing to an increase in exports, particularly gold and cashew nuts.
Likewise, the level of liquidity in the economy remained adequate and interest rates decreased, although marginally. Despite challenges to global supply chains due to COVID-19, private sector credit growth was powerful.