BoT: Pension funds’ lending to govt goes beyond set limit

Wednesday March 18 2020

 

By The Citizen Reporter @TheCitizenTZ news@tz.nationmedia.com

Dar es Salaam. Pension funds lending to the government reached 11.4 percent of total investments during the year that ended on March 31, 2019. This was beyond the ten percent limit as the social security funds investment guidelines stipulate.

According to the Bank of Tanzania’s (BoT), financial stability report for the year to March 31, 2019 published recently, the pension funds’ lending to government between March 2018 and March 2019 ranged between 11.2 percent and 14.1 percent.

The report says the government remains the core investment avenue for pension funds, as it accounts for 46.7 per cent of thei funds’ total investments.

Government debts - including Treasury bills and Treasury Bonds - continue to hold the largest share of pension funds investments, at 35.3 percent of total investments. Yet, is still below the limit of between 20 and 70 percent.

Other major pension funds investments went into real estate, which had 18.7 percent as at March 2019, below the limit of 30 percent.

The report further says pension funds increased their investments in other areas - including collective investment schemes - to 1.8 percent in March 2019, up from 1.5 percent in March 2018. Infrastructure investments rose to 3.3 percent from 2.9 percent.

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The BoT report also states that ordinary and preference shares went up to 8.1 percent, from 7.2 percent.

Loans to corporates and cooperative societies virtually remained flat at 3.3 percent during the period reported upon by the central bank, while investment in commercial papers and promissory notes was zero percent in March, dropping from 0.3 percent in March 2018.

However, the report shows that the pension funds reduced their investments in some areas, including bank deposits - which slowed to 6.3 percent, from 9.8 percent - and other unspecified assets (to 10.9 percent, from 11 percent.

Generally, the BoT report says the shifts have also reduced the pension funds’ assets to Sh11.5 trillion in March 2019, down from Sh12.3 trillion in March 2018.

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