Central bank bans foreign currency domestic transactions

The Bank of Tanzania (BoT), in partnership with the Ministry of Finance, is working on new regulations to enforce a ban on using foreign currencies for domestic transactions. The Citizen notes that this follows amendments made to the Bank of Tanzania Act under Section 26(2), which now prohibits the use of foreign currency for transactions within the country. The law aims to protect Tanzania’s monetary policy by ensuring that the Tanzanian shilling remains the primary currency in use. Manager of international economics at BoT Villela Waane said once the drafting process was completed, the regulations would be gazetted and made available to the public. She said the use of foreign currency undermined the effectiveness of Tanzania's monetary policy and contributed to inflationary pressures. The BoT, she said, has instructed commercial banks to cease facilitating transactions involving foreign currencies, including payments for taxes, fees, goods and services. ‘The aim is to strengthen the Tanzanian Shilling's value and ensure foreign currencies are reserved solely for essential imports,’ she added. The director of financial markets at BoT, Emmanuel Akaro, said certain individuals have been paying for goods, including property rentals and school fees, using foreign currencies, an act that is now deemed illegal.