Although Tanzania's average annual inflation rate is currently hovering at just above 5 per cent, members of the public have long been saying that the price pinch they are currently feeling in their daily lives suggests it is much higher.
Magufuli’s remarks yesterday appeared to resonate with these views as he questioned the Bank of Tanzania (BoT) about the official numbers at a ceremony to mark the central bank's 50th anniversary.
"(We are told that) Tanzania's inflation rate has fallen from around 30 per cent (in the 1990s) to 5.2 per cent (in May 2016). But is this really reflected in the lives of Tanzanians?" he queried.
"Has this single-digit inflation rate been reflected in the lives of poor Tanzanians? We can just celebrate these statistical data, but in reality people might feel that the inflation rate has actually increased to 70 per cent," the president added.
The inflation rate measures how fast prices for goods and services rise over time, or how much less one unit of currency can buy today compared to the same unit of currency at a given time in the past.
In Tanzania, inflation figures are compiled and released by the state-run National Bureau of Statistics (NBS), while the BoT uses several monetary policy measures to limit inflation in order to keep the economy running smoothly.
Magufuli quizzed BoT governor Benno Ndulu and other top central bank officials about calculations of the current purchasing power of the shilling compared to the 1990s when the inflation rate was at around 30 per cent.
NBS announced in February that it has changed its inflation rate calculation formula by reducing the weight given to food in the basket of goods and services used for the exercise.
Food prices are the single-biggest drivers of the national inflation rate.
Some independent economists have also previously expressed skepticism about the inflation figures, saying they do not tally with the economic realities of the day as reflected in the ongoing rising costs of food and non-food items like fuel.
At yesterday’s event, President Magufuli also directed the BoT, Ministry of Finance and Planning, and other relevant government organs to tighten checks on commercial banks and bureaux de change in a bid to curb money laundering activities.
He ordered the central bank to audit these and other money-transfer shops and take action against those that are found to be being used as channels for such criminal practices.
Banks and financial institutions with dormant yet liquid accounts should be specifically targeted in the anti-money laundering drive, the president instructed.
“There is no need for me to mention the banks with large dormant accounts since you all know them. One of the accounts was found with 23 billion/- that has stayed untouched for more than 10 years…you must seize it”, he told the central bank officials.
He also ordered the BoT and finance ministry to take action against the management of Twiga Bancorp, describing the small state-run bank as a "perennial loss-making entity."
"If it can't survive, let it die," the president said in reference to Twiga Bancorp, revealing that the bank has posted a loss of 18 billion/- and criticising the fact that no action has been taken against the bank’s management for under-performance.
He said his administration will not continue to provide state subsidies to loss-making parastatals.
Magufuli also directed the finance ministry and central bank to establish a single treasury account for all government funds. Through this account, the government will be able to control the public purse, he said.
“All (government) monies in other East African States such as Rwanda, Uganda and Kenya are channeled through a single treasury account”, he said.