America's plan to tighten its monetary policy has alarmed economic analysts, who claim that the action will hasten the dollar's scarcity and increase pressure on exchange rates with other currencies. According to experts, the decision will increase US investment while Tanzania, like the rest of the globe, will continue to experience currency shortages.
Tanzania is already suffering from a lack of US dollars, and lately, oil importers voiced concern about the same problem.
“This move will cause a huge shortage of the greenback and affect economies, including Tanzania, that depend on imports in a majority of its productive goods like machinery that need forex and cooking oil that has a very huge bill. That will derail development activities,” said Prof Abel Kinyondo who is an expert in development economics, at the University of Dar es Salaam (UDSM).
He also noted that the best course of action in such a circumstance was to boost local output since the more the country imports, the greater the demand for the dollar, which results in a decline in the value of the shilling relative to the dollar.
Furthermore, the professor said that the nation has gas reserves that should be released and used in home-grown automobiles to lessen reliance on foreign fuel.
The governor of the Bank of Tanzania (BoT), Emmanuel Tutuba, stated that the organization is ready to tackle the issue by utilizing a variety of methods, such as loans, swaps, exports of products and services, tourism, remittances, and income from individual overseas investments, to mobilize more foreign money.
“This is not the first time because US has been tightening monetary policy for more than a year now. We continue to intervene the market where necessary by monitoring exports to enable all US dollars are deposited in the country,” he said.
He said that the central bank had begun buying gold and had put aside money for steps to encourage import substitution and export promotion through the implementation of an Export Credit Guarantee Scheme through commercial banks.