Measures taken to cushion forex shortage

THE government through the Bank of Tanzania (BoT) has taken several steps to reduce effects of foreign exchange shortage in domestic market in order to allow business activities and transactions to continue.

Finance and Planning Deputy Minister Hamad Chande informed the National Assembly here yesterday while responding to a basic question by Ezra Chiwelesa (Biharamulo- West, CCM).

In his question the MP wanted to know the government stance over delay in sending money outside the country following the shortage of foreign currency in most of commercial banks in the country.

Responding, the deputy minister said since March this year the central bank has increased the amount of foreign currency sold at the Interbank Foreign Exchange Market (IFEM) from one million US dollars to two million US dollars daily.

“The government has also increased the amount acceptable to be sold through single retail transaction between banks from 250,000 US dollars to 500,000 US dollars and maintain acceptable liquidity in the economy through various means identified in the monetary policy,” he said.

He further said that, commercial banks in the country have continued to maintain enough deposits in foreign banks in order to facilitate transactions for payment of various commodities and services which are being ordered and sold outside the country.

The deputy minister also directed all commercial banks in the country to ensure that they have enough reserve of foreign currency before receiving money from a customer who want to send foreign currencies outside the country in order to avoid delays.

In his supplementary question the MP said that   most of commercial banks in the country were facing shortage of foreign currency contrary to what the government has said the situation that has caused traders especially at Kariakoo market to encounter inconvenience in accessing foreign currency.

He said currently a customer at CRDB Bank cannot get more than 1,000 US dollars per day while in other banks a customer can get not more than 500 US dollars per day.

The MP said that the situation has caused delay in sending money outside the country because a person is forced to visit various banks in order to get the amount of foreign currency he needs.

The lawmaker also said that the country has been conducting business with Asian nations such as China India, and Turkey  but traders are forced to change Tanzanian shillings to US dollars and when they reach to respective countries they are also required to change the dollars to local currency of the respective countries the situation which has caused traders to incur losses.

He said it was time the government talked to the countries in order for Tanzanian traders to acquire currency of the countries they are going to trade with from Tanzania.

Responding, the deputy minister said that the government has taken various steps to address the problem noting that it has already   started holding talks with India over the matter.

India and Tanzania signed an agreement in March this year to use own local currencies, the Tanzanian shilling and the Indian rupee in trade between the two countries.

The Reserve Bank of India (RBI) paved the way for trade using local currencies by allowing authorized Indian banks to open Special Rupee Vestro Accounts (SRVA) in Tanzania.

He said that the government will do the same to other countries calling upon the MP to be patient as the matter is being worked upon.