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Paying for service in dollars illegal-Khatibu
2006-11-11 08:57:55
By Pascal Shao, Dodoma
The government has pledged to investigate allegations of haphazard pegging of commodity prices in US dollars or charging local services in foreign currency.
Speaking in Parliament in Dodoma yesterday, Deputy Minister for Finance Abdisalam Khatib, said the government would launch a massive investigation to identify the wrongdoers.
He was responding to a supplementary question asked by Siraju Kaboyonga (Tabora Urban, CCM) who demanded an explanation as to why some of the service providers insisted on payments to be made in foreign currency.
Khatib reminded the House that pegging of fees in dollars was contrary to the country’s financial regulations unless specified for approved transactions.
”This trend arises because of foreign trade imbalance, which is due to huge imports of commodities like petrol,” he said.
He said importation of petrol had gone up by 25 per cent in the past two years, while the volume of exports had hardly increased by four per cent.
”Despite the recent drought induced economic hardships, the country’s foreign reserves stood at US $ 2bn which is quite high, even after paying for importation of petrol and other commodities,” said the deputy minister.
He said funds received in the form of grants and budget support initiative from various sources enhanced the nourishment of the reserve.
He said that depreciation of the value of shilling against dollar had both pro and cons, as it promoted more exports rather than imports, thus bringing to equilibrium the two trade pillars.
Khatib said that on the other hand, a powerful currency induced the importation of goods, thus putting at risk the survival of local industries due to comparatively lower prices of imported goods.
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