In April 2025, Tanzania's financial markets demonstrated robust activity, reflecting strong investor confidence and effective liquidity management. The Government Securities Market saw significant oversubscription, with Treasury bill bids reaching TZS 275 billion against a tender size of TZS 218 billion and Treasury bond bids totaling TZS 1,076.7 billion against TZS 481.7 billion, driven by declining yields (e.g., Treasury bills at 8.86%, down from 10.10%). The Interbank Cash Market recorded a 48.5% surge in transaction volume to TZS 2,611.1 billion, with a stable interest rate of 8.00%, supporting efficient liquidity redistribution among banks. The following table summarizes these key figures.

1. Government Securities Market

The Government Securities Market in Tanzania, encompassing Treasury bills and bonds, is a critical component of public debt financing and monetary policy implementation. The data you provided for April 2025 highlights strong investor confidence, high liquidity, and favorable macroeconomic conditions.

Key Figures and Details:

• Treasury Bills:
  • Number of Auctions: 2 auctions were conducted in April 2025.
  • Total Tender Size: TZS 218 billion, representing the amount offered by the government.
  • Total Bids Received: TZS 275 billion, indicating oversubscription (bids exceeded the tender size by approximately 26.15%, calculated as [(275 - 218) / 218] × 100).
  • Successful Bids: TZS 208.2 billion, meaning 95.5% of the tender size was successfully allocated (208.2 / 218 × 100).
  • Weighted Average Yield (WAY): Decreased to 8.86% in April 2025 from 10.10% in March 2025, a reduction of 1.24 percentage points.
• Treasury Bonds:
  • Types Offered: 2-year, 10-year, and 20-year bonds.
  • Total Tender Size: TZS 481.7 billion.
  • Total Bids Received: TZS 1,076.7 billion, reflecting significant oversubscription (bids were 2.24 times the tender size, calculated as 1,076.7 / 481.7).
  • Successful Bids: TZS 519.6 billion, indicating that 107.8% of the tender size was allocated (519.6 / 481.7 × 100), suggesting the government accepted slightly more than the offered amount, likely due to favorable bid terms.
  • Bond Yields:
    • 2-year bond: Yield decreased to 12.08% (specific prior yield not provided, but a decline is noted).
    • 10-year bond: Yield slightly increased to 14.26%.
    • 20-year bond: Yield decreased to 15.11%.
• Implications of Oversubscription:
  • High Liquidity in the Banking Sector: The significant oversubscription (TZS 275 billion vs. TZS 218 billion for Treasury bills and TZS 1,076.7 billion vs. TZS 481.7 billion for bonds) indicates that banks and other investors had ample liquidity to invest in government securities.
  • Stable Macroeconomic Conditions: The document notes moderate headline inflation at 3.2% in April 2025 and a stable Central Bank Rate (CBR) at 6%, which likely contributed to a predictable investment environment, encouraging participation in auctions.
  • Rising Investor Confidence: The high bid-to-tender ratios and declining yields for Treasury bills and most bonds suggest strong demand for government securities, reflecting confidence in Tanzania’s fiscal and monetary stability.

Analysis and Contextual Insights:

• Yield Trends:
  • The decline in the weighted average yield for Treasury bills (from 10.10% to 8.86%) aligns with the document’s indication of easing inflationary pressures (e.g., core inflation dropped to 2.2% from 3.9% year-on-year). Lower yields suggest reduced risk perceptions and strong demand, as investors are willing to accept lower returns for secure government securities.
  • The mixed yield movements for bonds (decreases for 2-year and 20-year, slight increase for 10-year) reflect varying investor expectations across maturities. The slight increase in the 10-year bond yield to 14.26% may indicate some market anticipation of longer-term risks, possibly related to global economic uncertainties mentioned in the document (e.g., a projected global growth slowdown to 2.8% in 2025).
• Monetary Policy Link: The document explains that the Bank of Tanzania uses the discount rate, based on Treasury bill rates plus a loaded factor, to manage liquidity. The decline in Treasury bill yields to 8.86% suggests that the discount rate may also have remained stable or decreased, supporting the CBR’s maintenance at 6% to ensure inflation stays within the 5% medium-term target.
• Lombard Facility: The banks can pledge government securities for overnight loans via the Lombard facility. The high subscription rates for both Treasury bills and bonds indicate that banks likely hold significant portfolios of these securities, enhancing their ability to access central bank liquidity when needed.
• Public Debt Financing: The document defines public debt as including domestic debt to finance fiscal deficits. The successful bids (TZS 208.2 billion for bills and TZS 519.6 billion for bonds) demonstrate the government’s ability to raise substantial funds domestically, reducing reliance on external debt (noted as a component of national debt).

2. Interbank Cash Market (IBCM)

The Interbank Cash Market facilitates short-term lending and borrowing among banks, enabling efficient liquidity management. The data provided for April 2025 shows increased activity and stable interest rates.

Key Figures and Details:

• Total Transactions:
  • April 2025: TZS 2,611.1 billion, a significant increase from TZS 1,757.7 billion in March 2025, representing a 48.5% rise (calculated as [(2,611.1 - 1,757.7) / 1,757.7] × 100).
• Share of Transactions:
  • 7-day Deals: 40.7% of total transactions, indicating a preference for slightly longer-term liquidity management.
  • Overnight Deals: 15.2%, reflecting the use of the shortest-term loans for immediate liquidity needs.
• Overall IBCM Interest Rate:
  • Decreased slightly to 8.00% in April 2025 from 8.12% in March 2025, a reduction of 0.12 percentage points.
• Implications:
  • Active Liquidity Redistribution: The 48.5% increase in transaction volume suggests banks were actively managing liquidity, likely due to increased economic activity or seasonal demands (e.g., supporting agricultural trade, as food stocks increased to 557,228 tonnes).
  • Stable Interest Rates: The slight decline in the IBCM interest rate to 8.00% aligns with the stable CBR at 6%, indicating that interbank rates remained within the Bank of Tanzania’s target band, ensuring monetary policy effectiveness.

Analysis and Contextual Insights:

• Monetary Policy Framework: The document outlines that the Bank of Tanzania uses the CBR to influence money supply and interbank rates. The stable CBR at 6% and the slight decline in IBCM rates to 8.00% suggest effective monetary policy transmission, maintaining rates within a target band conducive to economic growth and price stability (inflation target of 5%).
• Repos and Reverse Repos: The defines repurchase agreements (repos) and reverse repos as tools used by the Bank of Tanzania to manage liquidity in the interbank market. The high transaction volume (TZS 2,611.1 billion) likely includes repo transactions, which facilitate short-term liquidity adjustments using government securities as collateral.
• Liquidity Dynamics: The document’s mention of the Lombard facility, where banks can borrow overnight from the central bank, complements the IBCM by providing an alternative liquidity source. The increased IBCM transaction volume suggests banks preferred interbank lending over central bank facilities, possibly due to favorable rates or sufficient market liquidity.
• Economic Context: The increase in food stocks and the release of 29,834 tonnes of maize by the National Food Reserve Agency indicate government spending to stabilize food prices, which may have increased liquidity needs in the banking sector. The IBCM’s robust activity (TZS 2,611.1 billion) reflects banks’ ability to redistribute this liquidity efficiently.

Conclusion

In April 2025, Tanzania’s financial markets demonstrated robustness:

• Government Securities Market: The market saw strong demand, with Treasury bills oversubscribed (TZS 275 billion bids vs. TZS 218 billion tender) and bonds significantly oversubscribed (TZS 1,076.7 billion bids vs. TZS 481.7 billion tender). Declining yields for Treasury bills (8.86%) and most bonds (2-year: 12.08%, 20-year: 15.11%) reflect high liquidity and investor confidence, supported by stable macroeconomic conditions (3.2% inflation, 6% CBR).
• Interbank Cash Market: Transaction volumes surged to TZS 2,611.1 billion from TZS 1,757.7 billion, with 7-day deals (40.7%) and overnight deals (15.2%) driving activity. The slight decline in interest rates to 8.00% indicates effective liquidity management within the Bank of Tanzania’s target band.

The table is designed to present the data clearly and concisely, focusing on the metrics you highlighted for both markets. Since the request is to develop a table with key figures.

In February 2025, Tanzania’s financial markets showed robust activity, with the government securities market attracting TZS 2.05 trillion in bids—well above the TZS 1.16 trillion accepted—indicating strong investor confidence, especially in long-term Treasury bonds. In the interbank cash market, trading rose to TZS 402.2 billion, up from TZS 362.9 billion in January, while the overnight interest rate inched up to 4.03%, reflecting slight liquidity tightening. Meanwhile, the interbank foreign exchange market saw increased trading, with volume rising to USD 72.9 million from USD 57.2 million, and the Tanzanian shilling depreciated slightly to TZS 2,566/USD from TZS 2,560/USD. These trends suggest a stable yet dynamic financial environment shaped by shifting investment strategies and external demand.

Tanzania Monthly Economic Review – March 2025, Insights on Tanzania’s financial market, focusing on:

1. Government Securities Market
2. Interbank Cash Market
3. Interbank Foreign Exchange Market

1. Government Securities Market (February 2025)

Government securities are used by the government to raise money from investors through Treasury bills (short-term) and Treasury bonds (long-term).

Key Figures:

• Total Government Securities Sold:
  ➤ TZS 1,162.5 billion (down from 1,245.4 billion in January)
• Bids Received:
  ➤ TZS 2,051.6 billion – shows high investor appetite
• Bids Accepted:
  ➤ TZS 1,162.5 billion
• Treasury Bills:
  ➤ Sales dropped to TZS 265.9 billion from TZS 402.2 billion
• Treasury Bonds:
  ➤ Sales increased to TZS 896.6 billion from TZS 843.2 billion

💡 Interpretation:
There’s strong demand for government securities (bids exceeded offers), especially long-term bonds. This suggests that investors have confidence in the government’s stability and prefer long-term instruments, possibly due to higher returns.

2. Interbank Cash Market

This is the market where banks lend to each other on a short-term basis to manage their liquidity.

Key Figures (February 2025):

• Total Volume Traded:
  ➤ TZS 402.2 billion, up from TZS 362.9 billion in January
• Average Overnight Interest Rate:
  ➤ 4.03%, slightly up from 3.92%

💡 Interpretation:
The increase in volume traded shows active liquidity management among banks. The slight rise in interest rates suggests tightening liquidity conditions, but rates remain relatively low, indicating a generally stable money market.

3. Interbank Foreign Exchange Market (IFEM)

This is where commercial banks trade foreign currency (mainly USD) among themselves under Bank of Tanzania oversight.

📊 Key Figures (February 2025):

• Total Traded Volume:
  ➤ USD 72.9 million, up from USD 57.2 million in January
• Exchange Rate (TZS/USD):
  ➤ 2,566.00, slightly depreciated from 2,560.00

💡 Interpretation:
The increase in forex traded volume indicates higher demand and activity in foreign exchange, possibly due to trade or debt service needs. The slight depreciation of the shilling reflects modest pressure on the local currency, potentially from import demand or capital outflows.

Summary Table: Key Financial Market Indicators (February 2025)

Tanzania’s financial markets tell us for February 2025, based on the three key segments:

1. Government Securities Market – Strong Investor Confidence, Shift to Long-Term

• The high volume of bids (TZS 2.05 trillion) compared to what was offered shows strong investor interest in government debt.
• A shift from Treasury bills (short-term) to Treasury bonds (long-term)—from TZS 402.2B to 265.9B for bills and TZS 843.2B to 896.6B for bonds—indicates:
  • Investors prefer long-term investments (possibly due to attractive yields).
  • There is confidence in government fiscal stability and interest rate trends.

What it means:
Investors are locking in longer-term returns, expecting stable or declining interest rates and trusting the government's ability to repay.

2. Interbank Cash Market – Active Liquidity Management

• Volume increased from TZS 362.9B to 402.2B, showing banks are actively lending to one another to manage short-term cash needs.
• The slight rise in the overnight rate from 3.92% to 4.03% suggests mild liquidity tightening, but the rate is still low, meaning the market remains well-supplied with funds.

Banks are liquid and trust each other enough to trade funds, which indicates a stable banking system. The Bank of Tanzania may be carefully managing liquidity to avoid inflation or excessive credit growth.

3. Interbank Foreign Exchange Market – Rising Demand for Forex, Slight Shilling Pressure

• Forex volume jumped from USD 57.2M to USD 72.9M, indicating increased foreign currency demand—possibly due to:
  • Import payments
  • External debt service
  • Corporate demand
• The exchange rate weakened slightly from TZS 2,560/USD to 2,566/USD, showing modest pressure on the Tanzanian shilling.

Demand for US dollars is rising—possibly reflecting stronger import activity, or capital outflows. The slight depreciation suggests moderate currency pressure, but still under control.

Overall Takeaway:

• Tanzania’s financial markets are active and relatively stable.
• The government continues to attract strong investor demand, especially for long-term borrowing.
• Banks are managing liquidity effectively, with low interbank rates.
• Forex activity is increasing, hinting at growing external financial transactions, with slight pressure on the exchange rate.