Dar es Salaam. Debate continues over amendments to the Finance Act, 2026, that would allow the Government to borrow from the Bank of Tanzania (BoT), with critics arguing that the new provision does not clearly explain how such loans would be repaid.
Others have questioned how the government can borrow its own reserves, noting that funds held by the central bank are national assets and that the government already has the authority to access them during emergencies.
At the centre of the debate is the newly introduced Section 69, which allows the BoT to extend a short-term loan to the government in the event of an unforeseen or unavoidable occurrence that causes a temporary decline in public revenue.
Section 69(1) states: “Subject to the provisions of Sections 34, 35 and 37, the Bank may grant the government a short-term loan where an unforeseen or unavoidable event causes a temporary shortfall in government revenue.”
Section 69(3)(a)–(c) further provides that: “For this section, an unforeseen or unavoidable event shall only include a disaster as defined under the Disaster Management Act.”
The provision also covers an event, condition, or economic shock originating outside the country that has an exceptional impact, as well as a state of emergency declared under the Constitution of the United Republic of Tanzania.
Loan repayment
On social media, several stakeholders have criticised the amendments, arguing that they could allow the government to borrow from the BoT without a clearly defined repayment framework.
Writing on his X account, independent lawyer Jebra Kambole argued that the proposed amendments appear to allow the government to access BoT financing without establishing mechanisms to guarantee repayment.
“The proposed legal amendments would allow the government to borrow from the BoT, yet there are no legal mechanisms for repaying that money,” writes Mr Kambole.
In his view, the move amounts to another form of exploiting national resources, as traditional borrowing options have been exhausted and authorities are now lending money to themselves without any obligation to repay it.
However, a review of the legislation shows that repayment provisions are already contained in Sections 34, 35, and 37 of the BoT Act, which are specifically referenced under Section 69 of the amended Finance Act.
Under Section 34(2)(a) of the BoT Act, the government is required to repay any loan within 180 days, or about six months from the date of disbursement.
Furthermore, Section 34(2)(b) states that the loan “shall attract interest at market rates determined by the Bank”.
Section 35 limits the amount the central bank may lend or guarantee on behalf of the government, reducing the ceiling from 18 percent to 14 percent of the previous year’s revenue.
Section 37 further stipulates that, except as provided under Sections 34 and 35, the BoT may not extend credit directly to the government or through any other arrangement.
Borrowing from itself
Speaking on Monday, June 22, 2026, monetary policy analyst Dr Leonard Rweyemamu said that, despite the legal safeguards, reliance on BoT financing could weaken fiscal discipline and compromise the central bank’s independence.
He said one of the BoT’s core responsibilities is to preserve the value of the currency, contain inflation, and safeguard the country’s reserves.
“The easier it becomes for the government to borrow from the BoT, the greater the risk that it will become complacent about improving revenue collection and controlling public expenditure,” said Dr Rweyemamu.
He argued that the key issue is not whether the government should access funds during emergencies, but ensuring that the arrangement does not evolve into a permanent source of financing.
“When governments begin relying on central bank financing, it affects the independence of monetary policy and increases inflationary risks if adequate safeguards are not maintained,” he said.
Economist Prof Amani Mshana, however, said central banks in many countries provide short-term financing to governments during economic shocks, natural disasters, or temporary revenue shortfalls.
“Since the law sets limits on borrowing, repayment periods, and market-based interest rates, the arrangement could help the government address temporary shocks without resorting to costly borrowing from domestic or international financial markets,” he said.
Commenting on the issue, economist Dr Isdori Minani said the arrangement would be acceptable if there were sufficient integrity and accountability in the management of public funds.
However, he said concerns over governance standards and the limited independence of oversight institutions raise legitimate questions about whether such loans would actually be repaid.
“If the country’s leaders are honest, if there is effective oversight, and if institutions are free to hold the government accountable for loans it has taken and must repay, this would be a positive development,” said Dr Minani.
He said his concerns stem from past instances in which the government borrowed from social security funds and delayed repayments, resulting in financial pressure on the schemes and delays in benefits reaching retirees.
Ultimately, he said, whether the arrangement proves beneficial or harmful will depend on the government’s commitment to integrity, accountability, and prudent financial management.
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