TR Lawrence Mafuru told reporters in Dar
es Salaam yesterday that the situation should not be linked with the
government’s decision to direct all public institutions, parastatals and
agencies to open an account with the BoT.
“The banks should tell the public the
truth, as of September, this year, they are having 1.43tri/-
non-performing loans while our account at the BoT during the same period
had 515bn/-“, he stressed.
He added: ‘’You can tell who is
responsible for tight liquidity, people have borrowed and are not paying
back their loans and during the same period the commercial banks have
issued a 16tri/- loans.”
Mr Mafuru said the bank has decided to
direct all public institutions to open up an account at the central bank
as the government was borrowing money from the commercial banks at very
high interest rates.
“The government was borrowing its own
money from commercial banks - and at a high interest rate. But the
counter has changed whereas BoT is the one giving out the money,” Mr
Mafuru pointed out.
He noted that the trend has made things
easier as the government, through the Ministry of Finance, can borrow at
a reasonable rate and facilitate development projects.
Mr Mafuru said the commercial bank can
also access the overnight market at the BoT if they want to borrow from
the central bank. He added that tight liquidity can also be attributed
by the fact that the government’s priority is development project
infrastructure.
“We want to be an industrial economy
country. You have to settle your level playing field to meet the
requirement and thus when infrastructures are set we have to bear the
expenses,” he remarked, adding: “We have purchased aircraft and since we
do not make them here, the cash was paid in Canada.
As for the standard gauge railway, the contractor is from China. Its benefits cannot be felt now; so let people be patient.”
He further noted that planning was a
priority, comparing the situation to a family deciding to cut down on
travel and outings so that the savings can buy a plot while children are
likely to applaud the decision.
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