BoT sheds light on money flow

THE Bank of Tanzania (BoT) has said there is sufficient money in circulation to keep the economy going while attributing the tight liquidity situation to tight tax collection measures, cost cutting and crackdown on corruption by the government.

BoT Governor, Professor Benno Ndulu, said in Dar es Salaam yesterday that the bank was closely monitoring money in circulation, including all transactions conducted through commercial banks.

“Nationally, there is enough money in circulation to serve and implement various public projects for the interests of all the people,” he pointed out; adding that what is currently being experienced is the absence of cheap money that was obtained through illicit means.

He stated that the government had plugged loopholes in illicit or cheap means of getting money (popularly known as ‘mission town’), which explains why the mission schemers were now crying out for money.

Similarly, Prof Ndulu said although public firms have shifted their accounts from commercial banks to the BoT, the good thing was that the government entities are still using the same financial institutions to channel their funds into various projects.

For example, in every 100/-; 36/- pass through commercial banks and 64/- by the people and outside the formal system.

On executing the government expenditures for the first six months, the governor said there have been difficulties in obtaining foreign aid due to the world economic crunch, adding, however, that the cost cutting and tax collection measures helped to fund various projects.

Prof Ndulu said that during the period under review, foreign aid accounted for only one per cent of all revenues, loans 8 per cent while 91 per cent was sourced from domestic borrowing and revenue collection.

“The ratio between national debt and revenue collection is good.