BoT counters social media reports on money printing

Dar es Salaam. The Bank of Tanzania (BoT) has assured the public that the process of printing banknotes and coins is done in accordance with laws.

It further highlighted that the printing of money is only done after the completion of drawings and designing process, including identifying the type of paper to be used, country identification marks and security marks.

After finalising the process, BoT identifies how much is required by the country for a specific period focusing on the GDP growth, inflation and reimbursement of non-renewable flows and buffer stocks to satisfy the entire period of the printing process before embarking on printing new notes.

In a statement on Tuesday, September 11,2018,  BoT refuted social media reports that the central bank had printed new notes for Sh1.5 trillion for the government use.

The bank calls on the public to stop circulating false information that could adversely affect the country’s economy.

According to the bank, the government revenues normally do not match with its month-to-month expenditure.

There are times when revenues are high, but during the last quarter and other months the revenues drop.

Due to the mismatch in government revenues and expenditure it is allowed to take short-term loans from BoT to fill the gaps and pay back.

“This process is practised everywhere in the world and the law permits the government to take short-term loans from the central bank for up to 12.5 per cent of the government internal revenues  for the previous year,” the statement reads.

To get the real picture of the state budget and the state of debt, it is important to look at the entire trend over the 12 months of the fiscal year, rather than checking on a monthly basis, because there could be change in the period.

The year-round perspective provides revenue and expenditure reductions, and the increase in debt required to facilitate the implementation of the state budget during that period.

The monthly banking statement of the July issue shows that the bank's overdraft increased.

However, the increase should not be considered as an event in June 2018 only since the statement indicates that between June 2017 and May 2018 overdraft of BoT decreased by Sh936.6 billion, from Sh1,466.6 billion to Sh610 billion. This decline was due to normal government revenue and foreign loans.