Tanzania's central bank approves measures to reduce effects of COVID-19 pandemic

Source: Xinhua | 2020-05-13

The Bank of Tanzania (BoT) has approved various measures aimed at cushioning the economy from adverse effects of the COVID-19 pandemic, the central bank said in a statement on Tuesday.

The statement signed by BoT Governor Florens Luoga said BoT lowered the statutory minimum reserves requirement from 7 percent to 6 percent with effect from June 8, 2020.

"This measure is expected to provide additional liquidity to banks," said the statement.

Another measure, added the statement, is reduction of the discount rate from 7 percent to 5 percent with effect from May 12, 2020, providing an additional space for banks to borrow from the central bank at a lower cost, thus signaling lower lending rates by banks.

The statement said the central bank approved the measures after a thorough assessment of the impact of the COVID-19 pandemic on various sectors.

"The aim of the measures is to safeguard the financial sector stability and continue facilitating the financial intermediation process," said the statement.

The statement said banks and financial institutions should thoroughly assess financial difficulties experienced by borrowers due to COVID-19 in respect of loan repayment and discuss on the possibility of restructuring of the loans.

Mobile money operators should increase daily transaction limit to customers from three million Tanzanian shillings (about 1,296 U.S. dollars) to five million shillings, said the statement.

"This measure will encourage customers to use digital payment platforms for transactions, thereby reducing congestion in banking premises," said the statement.

According to the statement, the central bank assured the general public that the country has adequate foreign exchange reserves for importation of goods and services.