This archive report was first published on 13 May 2020.
On May 12, 2020, the Bank of Tanzania made significant moves to mitigate the economic impact of the COVID-19 pandemic. The central bank lowered its benchmark lending rate from 7% to 5% to provide additional space for banks to borrow at a lower cost.
According to a statement by BoT Governor Prof Florens Luoga, the policy change aims to signal lower rates by banks, thereby reducing the cost of loans for consumers and businesses.
The regulator also resolved to lower Statutory Minimum Reserves (SMR) to six percent, from seven percent, effective June 8, 2020, to spur liquidity.
Additionally, the bank imposed haircuts on government securities and treasury bonds. The haircuts were decreased from 10% to 5% for treasury bills and from 40% to 20% for treasury bonds, allowing banks to borrow with less collateral.
The Monetary Policy Committee (MPC) urged lenders to consider restructuring their loans on a case-by-case basis to support debtors through the pandemic.
Furthermore, BoT approved the increase of mobile money transaction limits to reduce congestion in banking halls and prevent the further spread of the coronavirus. Mobile money operators were allowed to increase the daily transaction limit to customers from Tsh3,000,000 ($1,291) to Tsh5,000,000 ($2,151) and the daily balance from Tsh5,000,000 ($2,151) to Tsh10,000,000 ($4,303).
At the time, Tanzania had recorded 509 coronavirus cases with 183 recoveries and a death toll of 21.
