The stable liquidity of Tanzania’s state coffers has attracted a lot of investment steam, especially after government securities proved to be profitable.
Indicators show that subsequent to the over-subscription of Treasury Bills that the government had offered for a 90-day period to run for a year, the Headline Inflation Rate, starting early 2013 has gone down to 10.9%, exactly 2 percentage points lower than the previous postings in December last year.
Though the gross index of inflation climbed to the current 138.26 points, an increase of more than 14 points, the mainstays of the economy featuring food as well as non-intoxicating drinks had their inflation margin drop to the current 11.9%, the previous margin having stood at 13.1%.
Exponential number of investors
The impressive score of the Treasury Bills at the sale is a result of the depreciation of interest rates in most areas of the economy, which indicates that the country enjoys more stable liquidity.
The Bank of Tanzania (BOT) began to offer Treasury Bills the forgoing year that have attracted an exponential number of investors, with the most recent one that took place in the second week of February attracting an over-subscription rate of 81.67%. This is despite the fact that the government is not placing handsome interest rates into these bills.
At that auction, the government had been eyeing to fork back TSh135 billion but had to give a popular allowance, to settle for the higher TSh160.22 billion. This was not even representative of the total application base which had attracted some TSh245.26 billion worth of total tender application sum. The impressive score of the Treasury Bills at the sale is a result of the depreciation of interest rates in most areas of the economy, which indicates that the country enjoys more stable liquidity.
Commercial banks including Barclays also chipped in a word or two, late 2012, by commenting on a previous over-subscription rate for government Treasury Bills that was above Sh110 billion.
Standard Chartered on the other hand had said that an auction that had ran for 91 days saw the market rate go down by 5 basis points, a depreciation in comparison with the highest depreciation of the same year, the 35-day auction which dropped by 7.62%.
In spite of these drops, the over-subscription rate for all Treasury Bills tenures, late 2012, went overboard, with the 35-day provision attracting a subscription sum that amounted to TSh40 billion, which was a yield of 7.62% though the state just needed Sh10 billion for the same. The national bank did not flinch from this overboard figure and took with it only the ten billion that it really needed.