Depreciation of Tanzanian shilling disaster for economy: opposition

Tanzania's opposition members of parliament said on Thursday that the ongoing depreciation of the east African nation's local currency was a disaster to business and the economy.

James Mbatia, Shadow Minister for Finance, told parliament in the country's political capital Dodoma that if the depreciation rate of 6.36 percent in just 12 days persists, the Tanzanian shilling will hit 3,000 shillings per one U.S. dollar in the middle of August.

He said from June 11 when the government tabled its main budget in parliament, the local currency depreciated from 2,200 to 2,340 shillings per U.S. dollar on June 23.

"Governments over the world have mechanisms to protect their currencies against shocks like this but we wonder why the Tanzanian government is not taking reasonable measures to contain this," Mbatia said when debating the finance bill.

Reacting to the MPs concerns, Finance Minister Saada Mkuya told the House that there was nothing the government could do as the fall of the shilling was prompted by the stronger dollar that also sent all major currencies in Africa in free-fall.

"We are giving these figures because price imported products will keep on rising and that will impact on the cost of living," she said, adding that high demand of dollars will drain the local money circulation and therefore difficult to implement the budget.

Parliament approved the Finance Bill 2015 which has reduced import duty on industrial sugar from 50 percent proposed during budget tabling to 25 percent to avoid affecting business capital.

MP John Cheyo who contributed to the bill said instead of increasing tax on exporting raw hides, the government should establish leather processing industries.

"This tax measure aims at discouraging exporting raw hides but to make hides meaningful to farmers and livestock keepers, the government should plan to establish processing plants locally," said Cheyo.

David Kafulila said Tanzania was losing revenue through importing crude palm oil without charging import duty.

He said Tanzania should embark on developing the local sources of edible oil including sunflower, ground nuts and palm itself.

"The government is also missing revenue from sectors like the telecoms which is not properly regulated," he said. Endi