“Loans granted to the private sector by banks are increasing”
Finance and Planning Minister Dr Mwigulu Nchemba made the revelation earlier this week in the House during the presentation of a report on the state of the national economy and the national development plan for 2020 /21.
According to Dr. Nchemba, the situation facilitates the maintenance of liquidity in the banking sector thanks to the various measures taken by the government.
“Lending to the private sector has continued to grow at a healthy pace thanks to fiscal and fiscal policies, as well as ongoing government measures to improve the business environment, and the implementation of policy measures taken by the government through the Central Bank aimed at stimulating credit growth and reducing mortgage interest rates,” he said.
He said that over the past few months, the pace of credit growth had increased to 13.4% for the year ending April 2022, he said, noting that the majority of loans were for private activities which accounted for 39.3% of total loans, followed by commercial activities. (16.7%), industrial production (10.1%) and agriculture (7.9%).
Nchemba said the situation contributed to the implementation of monetary policy which helped maintain an adequate level of liquidity in the banking sector, leading to the stabilization of interest rates in the short-term financial markets at lower rates.
For example, the overnight interbank market interest rate decreased to an average of 3.42% between July 2021 and April 2022, compared to an average of 3.60% during the same period in 2020/21.
Similarly, interest rates on short-term securities (headline treasury bill rate) decreased to an average of 4.17% from an average of 4.62% during the same period in 2021 .
He said liquidity in the banking sector also contributed to the trend of interest rates in the financial market to remain stable and at low levels.
“The average interest rate on bank loans for the entire private sector has declined albeit at a low rate of 16.44% over the period between July 2021 and April 2022, compared to an average of 16.59% over the same period in 2020/21,” he explained.
The Minister further stated that the pace of credit growth in the private sector is expected to continue to improve due to the recovery of the global economy, as well as policy measures taken by the central bank to stimulate low-cost lending. interest rate.