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Tanzania Enacts Measures to Limit Extensive Use of US Dollar

CC BY 2.0 / D-Stanley / Dar es Salaam, TanzaniaDar es Salaam, Tanzania
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Since last year, the East African country has taken a number of measures to reduce the amount of dollars in circulation in the country. These include a series of restrictions on foreign currency transactions.
Tanzania's Finance Minister, Dr. Mwigulu Nchemba, has issued a directive to reduce the widespread use of the US dollar in domestic transactions to address economic challenges. Starting July 1, 2024, all transactions and advertisements must be conducted in Tanzanian shillings, as stipulated by Section 26 of the Bank of Tanzania Act of 2006.
Dr. Nchemba highlighted the negative impacts of dollarization, including a shortage of dollars and increased depreciation of the Tanzanian shilling. He urged institutions, including government bodies, to adjust their regulations to comply with this directive, promoting financial stability and economic growth.
“Henceforth, all such payments were to be made in shillings, promoting financial stability and compliance with the law,” the official said in his budget speech to the national assembly.
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Furthermore, the minister emphasized the importance of reducing reliance on imports by fostering domestic production. This measure aims to conserve foreign currency reserves and support the local economy.
According to experts, the US dollar scarcity in Tanzania is due to multiple factors, including geopolitical instability, climate change, and the impact of the COVID-19 pandemic. During the BRICS summit held in South Africa from August 22-24, leaders agreed to explore the use of currencies less susceptible to geopolitical manipulation and sanctions, aiming to reduce the dominance of the US dollar in global trade.