BoT outlines relaxed policy measures to offset coronavirus impact
Dar es Salaam. Bank of Tanzania (BoT) has on Tuesday May 12 announced some monetary policy measures to offset the impact of coronavirus in the economy.
The measures including lowering the statutory minimum reserve requirement aim at protecting the financial sector stability.
The central bank lowered the reserve requirement – the amount of cash banks must maintain as reserves - from seven to six per cent to provide the banks with additional liquidity.
The BoT also reduced the discount rate – the level of interest at which commercial banks borrow from the central bank – from seven to five percent to allow them access cheaper loans hence signaling lower lending interest rates.
“The Monetary Policy Committee of the Bank of Tanzania which met on May 8, 2020, approved various policy measures to cushion the economy from adverse effects of Covid-19 after a thorough assessment of the impact on various sectors,” the central bank said in a statement.
Other measures include allowing the banks to borrow from the BoT with less collateral than before by reducing haircuts on government securities from 10 percent to five percent for treasury bills and from 40 per cent to 20 per cent for treasury bonds.
The BoT also allowed the commercial banks to discuss with their customers the possibility to restructure loans and ask them, in collaboration with the mobile network operators to increase transaction limits from Sh3 million to Sh5 million and daily balance from Sh5 million to Sh10 million.
