As of 31 October 2024, the Bank of Tanzania reported a 0.70% growth in total assets, reaching TZS 26.04 trillion, up from TZS 25.86 trillion in September. Key drivers included a 2.56% increase in cash reserves to TZS 6.03 trillion and a significant 11.00% rise in advances to the government to TZS 4.92 trillion, highlighting active government financing. However, total liabilities grew by 1.02% to TZS 23.19 trillion, driven by a 19% increase in bank and non-bank deposits, while equity declined by 1.86% due to lower reserves. This financial position underscores the BoT's role in stabilizing the economy while adapting to fiscal demands.

1. Assets

• Cash and Cash Equivalents: Increased from TZS 5,878,336,892 to TZS 6,028,657,113 (+2.56%).
• Special Drawing Rights (SDRs): Decreased slightly from TZS 5,836,763 to TZS 5,659,158 (-3.05%).
• Gold: Increased from TZS 84,475,916 to TZS 87,517,489 (+3.60%).
• Quota in IMF: Declined from TZS 1,462,735,502 to TZS 1,418,226,416 (-3.04%).
• Foreign Currency Marketable Securities: Decreased from TZS 8,536,478,436 to TZS 8,280,498,770 (-3.00%).
• Government Securities: Rose from TZS 1,949,033,712 to TZS 2,009,684,508 (+3.11%).
• Advances to Government: Increased significantly from TZS 4,436,239,821 to TZS 4,924,120,304 (+11.00%).
• Loans and Receivables: Dropped from TZS 1,165,276,684 to TZS 632,865,021 (-45.66%).
• Other Assets: Increased from TZS 1,056,699,639 to TZS 1,345,154,889 (+27.29%).

Total Assets: Grew marginally from TZS 25,861,049,022 to TZS 26,040,992,974 (+0.70%).

2. Liabilities

• Currency in Circulation: Increased from TZS 8,466,684,070 to TZS 8,589,148,419 (+1.44%).
• Deposits (Banks and Non-Bank Financial Institutions): Rose significantly from TZS 2,666,954,338 to TZS 3,174,614,584 (+19.01%).
• Deposits (Others): Increased from TZS 1,758,144,907 to TZS 2,105,619,381 (+19.74%).
• Foreign Currency Financial Liabilities: Dropped from TZS 6,114,091,872 to TZS 5,409,925,598 (-11.53%).
• BoT Liquidity Papers: Marginal increase from TZS 529,725,459 to TZS 530,743,366 (+0.19%).

Total Liabilities: Increased from TZS 22,951,123,876 to TZS 23,185,162,980 (+1.02%).

3. Equity

• Reserves: Decreased from TZS 2,809,925,146 to TZS 2,755,829,994 (-1.92%).
• Total Equity: Declined from TZS 2,909,925,146 to TZS 2,855,829,994 (-1.86%).

Summary

• Assets: Total value grew by TZS 179.94 billion (+0.70%), driven by increases in cash, government securities, and advances to the government. However, loans and receivables declined significantly.
• Liabilities: Total liabilities increased by TZS 234.04 billion (+1.02%), with significant contributions from bank and other deposits.
• Equity: Experienced a decline of TZS 54.10 billion (-1.86%) due to reduced reserves.

The Statement of Financial Position for the Bank of Tanzania (BoT) with key insights into the institution's financial health and operational activities as of October 2024.

1. Growth in Total Assets

• The increase in total assets (+0.70%) suggests the BoT has grown its resource base, albeit modestly.
• Key contributors include:
  • Cash and Cash Equivalents: Increased liquidity may reflect robust monetary policy or efficient operations.
  • Government Securities and Advances to the Government: Indicate a rising role in financing government operations, signaling increased public sector borrowing.

The BoT is actively involved in supporting government financial needs while maintaining a stable and growing asset base. However, declines in foreign marketable securities and IMF quotas suggest reduced exposure or participation in international holdings.

2. Liabilities Growth Outpaces Equity

• Liabilities grew (+1.02%) while equity declined (-1.86%). Significant increases in deposits from financial institutions and others highlight:
  • Increased trust and participation of banks and other entities in the BoT's activities.
  • A shift toward reliance on deposits to support financial operations.
• Reduction in foreign currency financial liabilities may point to lower external debt exposure.

The BoT is leveraging more local deposits and reducing international liabilities, which could enhance financial stability but might reduce reserves, reflected in the equity decline.

3. Decline in Loans and Receivables

• A sharp decrease (-45.66%) could mean:
  • Lower lending to local institutions.
  • Recovery or consolidation of prior loans.
• This impacts revenue streams from lending operations.

The BoT might be adopting a cautious approach to lending or focusing on other asset classes.

4. Currency in Circulation

• The modest increase in currency in circulation (+1.44%) suggests stable economic activity. This is a key indicator of public demand for cash and overall economic liquidity.

Economic transactions are steady, aligning with controlled monetary policy.

5. Drop in Reserves and Equity

• The decline in reserves (-1.92%) and total equity (-1.86%) could indicate:
  • Operational expenses or funding requirements that utilized part of the reserves.
  • An ongoing balancing act to support liabilities.

While the BoT remains solvent, reserve management might require attention to maintain long-term stability.

General Observations

• The BoT is playing a significant role in government financing and domestic monetary stability, likely in response to Tanzania's broader fiscal and economic needs.
• A focus on domestic liabilities, reduced foreign exposure, and increased cash holdings indicate prioritization of internal economic stability over external engagements.
• Declining equity and reserves suggest the need for careful balance between asset growth and financial sustainability.

Key Implication

The Bank of Tanzania's financial position reflects stability in monetary policy and active government support, but pressure on equity and reserves calls for prudent fiscal management to ensure long-term resilience.