BoT cuts lending rates amid COVID-19 threat

The Bank of Tanzania (BoT) has said it has lowered its statu- tory minimum reserve require- ment to 6 per cent from 7 per cent to smooth out the economic im- pact of the COVID-19 outbreak. 

The reduction of the re- serves will come into effect on June 8 this year to provide ad- ditional liquidity to banks. 

It was the latest move by BoT to help businesses weather the storm. And this measure is expected to increase liquidity in the banking sector, said Professor Florens Lu- oga, BoT Governor, in a staetment. 

This is due to the Monetary Policy Committee of the Central Bank that met on May 8 to approve various policy measures aimed at address- ing the impact of the coronavirus outbreak on the country’s economy. 

BoT also has decided to lower discount rate charged for banks to 5 per cent from 7 per cent to of- fer additional space for lenders to borrow from the Central Bank at a lower interest rate, thereby reduc- ing the interest rate on customers. 

Prof Luoga also pointed out that the central bank has increased relief by reducing haircuts on government securities to 5 per cent from 10 per cent on treasury bills, and 20 per cent from 40 per cent on treasury bonds to allow lenders increase the ability of ac- cessing funding from BoT with less collateral than ever before. 

The central bank also allowed commercialbanksandfinancialin- stitutions to critically evaluate the impact of the COVID-19 epidem- ic on loan restructuring, discuss with their customers on the possi- bility to restructure loans and ask them how to repay as appropriate. 

BoT promised to provide regula- tory flexibility for banks and finan- cial institutions that will provide re- lief for loans repayment with respect to transparency and impartiality. 

The central bank also allowed companies providing online fi- nancial services to increase the 

ceiling of transaction daily per customer to Tsh5 million from Tsh3 million, and the daily sav- ings rate per customer uplifted to Tsh10 million from Tsh5 million.