United Republic of Tanzania: Financial System Stability Assessment Update

IMF Staff Country Reports, June 23, 2010

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The global recession has had a significant impact on economic performance and the outlook in Tanzania.
Tanzanian banks were not directly affected by the global financial crisis, but second-round effects of the crisis have intensified the risks to the financial sector.
Domestic liquidity tightened considerably at the onset of the global financial crisis but has since eased, owing to a significant loosening of monetary policy to help mitigate the economic downturn.
The policy response of the authorities included a rescue package designed to support sectors affected by the crisis.

Second-round effects from the global financial crisis increased risks to the financial sector despite no direct initial exposure of Tanzanian banks.
Tightening and subsequent easing of domestic liquidity conditions were a central channel through which the global recession affected Tanzania’s financial system.
Monetary policy easing played a material role in restoring liquidity conditions.

Authorities implemented a rescue package aimed at supporting sectors affected by the global downturn.
Monetary policy was loosened significantly to help mitigate the economic downturn and ease liquidity conditions.

Subjects: Banking, Commercial banks, Credit, Financial institutions, Financial sector policy and analysis, Foreign banks, International trade, Money, Stress testing, Trade balance
Keywords: a number of bank, bank, banking sector, capital market, Commercial banks, community bank, CR, Credit, credit risk, deposit liability, exchange rate, financial condition, Foreign banks, Global, insolvent banks CAR, ISCR, loan, market, monetary policy, money market, Stress testing, Tanzania, Trade balance

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