Speaking at a special meeting with Members Parliament here yesterday on
the global financial market crisis, Prof Ndulu said the country`s
economic strength could be attributed to among others, the fact that
most of the local banks had enough capital to meet financial demands.
According to Prof Ndulu, the ratio of deposits of 68 per cent was below the limit of an average of 80 per cent.
He further said: “The interbank settlement system continued to be
trusted among the key stakeholders. Interbank cash market also is
performing well.“
The BoT chief noted that the level of loans offered to the country`s
private sector had grown to 47 per cent by December, last year.
He however said that strict rules and regulations governing local
banks, had positively contributed to a strong and safe financial
sector.
Limited number of foreign resources in the local commercial banks which
right now stood at 11 per cent also helped to make the sector safe in
the region, he clarified.
“Close application of laws governing foreign banks which are in the
country also led to the current situation, as these are treated as
independent banks rather than branches of the foreign banks,“ he said.
He cited CitiBank, Stanbic Bank, Standard Chartered Bank, Barclays Bank
as the few examples of the foreign banks which have not been affected.
Prof. Ndulu said his office had established an early warning system,
which on a daily basis provides the status of the country`s financial
sector.
He however warned that the foreign exchange market had gone down due to
low prices of agricultural produce such as cotton and coffee in the
international market.
Depreciation of the shilling over the other major currencies by 15 per cent was caused by the economic crunch.
“This drop is not only of the Tanzanian shilling but has also affected
currencies such as the Kenyan shilling which has dropped by upto 9.7
per cent, Uganda shilling- 20 per cent while the South African Rand
dropped by 50 per cent,“ he observed.
Despite growing fears, Prof. Ndulu assured Tanzanians that the central
bank would closely monitor the global economic trends and take
immediate action whenever necessary.
He also said the level of remittances to Tanzania, from the developed world would likely drop by 3 per cent.
Foreign Direct Investments as well as aid from the western countries is also likely to go down.
The governor further observed that the move would pose some challenges in implementing the 2008/09 fiscal budget.
Finance and Economic Affairs Minister Mustafa Mkulo said the government
would ensure that the magnitude of the impact caused by the economic
crisis was reduced to the minimum level.
Mkulo said promoting Tanzania `s tourist destinations to the world
community as well as improving infrastructure would be top priorities.
IPP Media
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