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Annual Report 2018/19 Bank of Tanzania

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Annual Report 2018/19 Bank of Tanzania BANK OF TANZANIA - ANNUAL REPORT 2018/19 REPORT ANNUAL - TANZANIA BANK OF BANK OF TANZANIA ANNUAL REPORT For inquiries contact: Director of Economic Research and Policy Bank of Tanzania, 2 Mirambo Street 11884 Dar es Salaam 2018/19 Tel: +255 22 223 3328/9 http://www.bot.go.tz bot cover.indd 1 10/01/2020 2:52 PM BANK OF TANZANIA ANNUAL REPORT 2018/19 Bank of Tanzania Annual Report 2018/19 © Bank of Tanzania. All rights reserved. This report is intended for general information only and is not intended to serve as financial or other advice. No content of this publication may be quoted or reproduced in any form without fully acknowledging the Bank of Tanzania Annual Report as the source. The Bank of Tanzania has taken every precaution to ensure accuracy of information and, therefore, shall not be liable to any person for inaccurate information or opinion contained in this publication. For any inquiry please contact: Director of Economic Research and Policy Bank of Tanzania, 2 Mirambo Street 11884, Dar es Salaam Telephone: +255 22 223 3328/9 Email: [email protected] This report is also available at: http://www.bot.go.tz ISSN 0067-3757 B Bank of Tanzania Annual Report 2018/19 December 2019 Hon. Dr. Philip I. Mpango (MP) Minister for Finance and Planning United Republic of Tanzania Treasury Square Building 40468 Dodoma Honourable Minister, LETTER OF TRANSMITTAL In accordance with Section 21 (1) of the Bank of Tanzania Act, 2006 as amended, I hereby submit: a) The report on economic developments and the Bank of Tanzania’s operations, in particular, the implementation and outcome of monetary policy, and other activities during the fiscal year 2018/19, and b) The Bank of Tanzania Balance Sheet as at 30th June 2019, the Profit and Loss Accounts for the year ended 30th June 2019 and associated financial statements, as well as detailed notes to the accounts for the year and the previous year’s comparative data certified by external auditors along with the auditors’ opinion. Yours sincerely, Professor Florens D.A.M. Luoga Governor Bank of Tanzania i Bank of Tanzania Annual Report 2018/19 Contents LETTER OF TRANSMITTAL ......................................................................................................... i Governor’s Foreword .................................................................................................................... iii Board of Directors ........................................................................................................................ iv Bank of Tanzania Mandate, Mission, Vision and Core Values ...................................................... vi Monetary Policy Framework of the Bank of Tanzania .................................................................. vii Executive Summary .................................................................................................................... ix PART I: CONDUCT OF MONETARY POLICY ............................................................................ 1 PART II: ECONOMIC PERFORMANCE ...................................................................................... 7 1.0 Domestic Economic Developments ................................................................................. 8 1.1 Output, Prices and Food Supply ............................................................................... 8 1.2 Financial Markets ........................................................................................................ 14 1.3 Public Finance ............................................................................................................ 16 2.0 External Sector ................................................................................................................... 20 3.0 Financial Sector .................................................................................................................. 24 4.0 Payment Systems .............................................................................................................. 28 5.0 Zanzibar Economic Performance ..................................................................................... 30 6.0 Global and Regional Economic Performance ...................................................................... 36 PART III: BANK OF TANZANIA OPERATIONS .......................................................................... 41 PART IV: ANNUAL ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2019 ................................ 49 PART V: CALENDAR OF IMPORTANT MONETARY AND FINANCIAL EVENTS .................... 193 PART VI: STATISTICAL TABLES .................................................................................................. 197 ii Bank of Tanzania Annual Report 2018/19 Governor’s Foreword It is my great pleasure to present the Bank of Tanzania annual report for the year ended 30th June 2019. The report entails implementation of monetary policy, a comprehensive overview of the domestic economy and external environment, as well as operations of the Bank, which include financial statements. The Bank of Tanzania implemented an accommodative monetary policy to revitalize private sector credit growth, thereby reinforcing sustainable high growth momentum of the economy. The policy stance was consistent with the objective of maintaining low inflation close to the country’s medium-term target of 5.0 percent, and within the EAC and SADC convergence benchmarks of utmost 8.0 percent and between 3.0 and 7.0 percent, respectively. The outcomes of accommodative monetary policy included fast recovery of private sector credit growth and fall in interest rates. The economy sustained high growth momentum and diversified. Real GDP grew by 7.0 percent in 2018, faster than 6.8 percent in 2017, driven mostly by investment in social and physical infrastructure, agriculture, manufacturing, and trade. The fastest growing activities were agriculture, construction, and transport. Fiscal policy was on track. Revenue collection improved and expenditure was rationalized on available resources and priorities. The external sector of the economy performed satisfactorily, albeit faced with global challenges of trade war between the US and China, geopolitical tensions in some regions of the world, and policy uncertainties in advanced economies. These challenges led to a decrease in demand for crop exports (particularly cotton), low return on foreign exchange reserves and increase in petroleum products. Monetary policy will continue to focus on maintaining low inflation, ensure stability of the exchange rate, and respond to economic conditions and policies in an endeavour to sustain the growth of the economy. The Bank will also improve the functioning of the financial sector, among other intended outcomes, to reduce credit interest rates and improve lending to the private sector. This includes measures to improve payment systems in the process of digitization of the economy, as well as spearheading financial inclusion initiatives and development of financial markets. I would like to thank the Board of Directors for guidance and contributions made in formulation and implementation of monetary policy, and oversight of functions of the Bank during 2018/19. I would also like to express my gratitude to the management and staff for their commitment and professionalism in discharging their duties, which enabled the Bank to achieve its objectives. It is my sincere hope that you will find this Annual Report beneficial. Professor Florens D.A.M. Luoga Governor Bank of Tanzania iii Bank of Tanzania Annual Report 2018/19 Board of Directors The Board is at the apex of the governance structure of the Bank of Tanzania, and is chaired by the Governor of the Bank of Tanzania, who is also the Chief Executive Officer of the Bank. The Board is mainly responsible for determination of the policy of the Bank and approval of its budget. Bank of Tanzania Board of Directors is composed of the Governor; Deputy Governors; the Permanent Secretary, Ministry of Finance and Planning of the Government of United Republic of Tanzania (URT); the Principal Secretary, Ministry of Finance and Planning of the Revolutionary Government of Zanzibar (RGZ); and four non-executive Directors. The Permanent Secretary, Ministry of Finance and Planning of the URT and the Principal Secretary, Ministry of Finance and Planning of the RGZ may appoint, in writing, persons in the public service to be their representatives. The appointed persons have the powers of the Permanent Secretary or Principal Secretary, in their capacities as members of the Board. iv Bank of Tanzania Annual Report 2018/19 Board of Directors Prof. Florens D.A.M. Luoga Governor, Chairman Dr. Yamungu M. Kayandabila Dr. Bernard Y. Kibesse Mr. Julian B. Raphael Deputy Governor, Economic and Deputy Governor, Financial Stability and Deputy Governor, Administration and Financial Policies (EFP) Financial Deepening (FSD) Internal Controls (AIC) Mr. Khamis M. Omar Mrs. Mary N. Maganga Prof. Nehemiah E. Osoro Principal Secretary to the Treasury, Representative of the Ministry of Director RGZ Finance and Planning (URT) Mr. Geoffrey I. Mwambe Mr. Joseph O. Haule Mr. Joseph A. Meza1 Director Director Director Mr. Palloty M. Luena Secretary 1 Appointed on 5th April, 2019 v Bank of Tanzania Annual Report 2018/19 Bank of Tanzania Mandate, Mission, Vision and Core Values Mandate: The primary objective of the Bank of Tanzania, as enshrined in the Bank of Tanzania Act 2006, Cap. 197, is to formulate, define and implement monetary policy directed
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