11 September 2017

Tanzania: No Plan to Restrict Use of Dollar - Govt

Photo: Edwin Mjwahuzi/The Citizen
Deputy Minister of Finance and Planning, Dr Ashatu Kijaji, responds to MPs in Parliament in Dodoma.

Dodoma — The government has ruled out any possibility of limiting the use of US dollars in the country, saying it has no negative impact on the value of the country's currency.

The Finance and Planning Deputy Minister, Dr Ashantu Kijaji, yesterday told the Parliament that depreciation of the Tanzanian shilling was due to many factors and had nothing to do with the use of US dollar in the country.

She was responding to Japhet Hasunga (Vwawa-CCM), who wanted to know, when the government would limit the use of the US dollar in the country to strengthen the value of Tanzanian shilling.

"There are some companies that sell their goods and services in US dollar, a tendency that, to a great extent, contributes to a fall in the value of local currency. What steps has the government taken to overcome this situation?" he asked. Moreover, Mr Hasunga also wanted to know, when the government would restrict the importation of foodstuffs to encourage domestic crop production.

"The country spends at least Sh2.8 trillion to import foodstuffs, mainly sugar and cooking oil. When will the government restrict the importation of such foodstuffs to boost local industrial production? he queried.

However, Mr Hussein Bashe (Nzega Urban-CCM), raised a concern over the fall in the country's export volume value from $4.5 million to $3.8 million, according to a recent report by the Bank of Tanzania (BoT).

"What steps has the government taken to overcome such a downward trend," he queried.

In her basic answer, Dr Kijaji said the depreciation of the local currency was a result of varied macroeconomic fundamentals in the country as well as the economic status among countries that Tanzania was trading with.

She mentioned the factors that might lead to the depreciation of the country's currency as foreign trade's balance payment, inflation and other seasonal causes.

However, she detailed that, most of the companies had their bills quotation (mode of payment) in Tanzanian currency for at least 99.9 per cent, whereby, it was only 0.1 per cent of the bills quotation, which were in US dollar. "For example, records show that in countries with a policy that bars the use of foreign currencies like South Africa, their home currencies have suffered a lot compared to Tanzania. This has happened even to other top currencies like Yen (Japan), Renmimbi (China) and Euro," she detailed.

Dr Kijaji also said the government had no any plan to bar importation of foodstuffs like sugar and cooking oil in the country because Tanzania did not have the capacity to produce for actual home demand. "We will only restrict importation of sugar, cooking oil and other foodstuffs by the time, when we will be capable of producing to the extent of meeting the actual local demand," she insisted.

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