BoT Plans Major Gold Purchase to Boost Reserves

The Bank of Tanzania (BoT) announced plans to purchase six tonnes of gold this financial year, the largest amount since the government began buying gold to diversify foreign exchange reserves and reduce reliance on a single currency. This decision was made during a quarterly meeting, according to BoT deputy governor Yamungu Kayandabila. Currently, BoT holds 418 kilograms of gold and aims to acquire six tonnes, in line with Finance Minister Mwigulu Nchemba’s budget presentation.
The initiative is part of the National Gold Reserve programme, which aims to bolster foreign exchange reserves and support monetary policy. The government is also encouraging local gold refining industries to obtain London Bullion Market Association (LBMA) certification to enhance quality and marketability. As of April 2024, BoT had purchased gold worth $26 million, with a target to buy six tonnes valued at $400 million.
Tanzania’s foreign exchange reserves stood at over $5 billion by the end of June 2024, sufficient for more than four months of imports. The central bank expects increased foreign exchange inflows from tourism, mining, traditional exports, and food exports to neighboring countries. Measures to limit dollar transactions are expected to boost reserves further.
BoT maintained the central bank rate (CBR) at six percent for the quarter ending September 2024 to sustain economic growth while managing inflation below the five percent target. The Monetary Policy Committee projects continued economic growth, adequate food supply, and eased exchange rate pressures due to increased foreign exchange inflows. The banking sector remains liquid, profitable, and well-capitalized, with improved asset quality and lower non-performing loan ratios.