The Foreign Exchange (Amendment) Regulations, 2023

The Foreign Exchange (Amendment) Regulations were published on September 1st, 2023 via Government Notice No. 622 (the Amendments). The Amendments amend the Foreign Exchange Regulations of 13th May 2022 (Principal Regulations) and are based on the following:

1. Dealing on foreign currencyn2. Borrowing from abroadn3. Condition for foreign credit accommodation

Dealing with foreign currency

The Principal Regulations provided that: An exporter cannot buy foreign currency in a bank or financial institution where he does not maintain a bank account relationship. At the same time, banks and financial institutions in the country were restricted from selling foreign currency to an exporter who does not maintain a bank account with that exporter. The Amendments have removed both of these restrictions in a bid to simplify foreign exchange transactions.

Borrowing from abroad

The Principal Regulations imposed a fine of Tanzania Shillings One Million for each day the foreign credit accommodation remains unregistered. The Amendments have deleted this penalty figure and substituted it with the general penalties provided in the Foreign Exchange Act (the Act).

The Act provides that the penalties for a non-registered currency from abroad is a sum not exceeding TZS 4 million or to imprisonment for a term not exceeding fourteen years, or both.

Condition for foreign credit accommodation

The Amendments deletes regulations (26) of the Principal Regulations which provided on the (a) interest rate and charges of foreign credit accommodation, (b) conditions precedents of the borrower to open the foreign currency account and (c) banks not to register foreign credits accommodations which contains unfavourable terms.

The Amendments has replaced the deleted section with the conditions that, the bank shall not register a foreign credit accommodation with unfavourable terms and conditions such as:

Interest rate and charges of foreign credit which does not reflect the market condition for the relevant currency of borrowing; and

The conditions that require the borrower to open an account out of Tanzania.

Disclaimer

The views expressed in this paper are those of the author only and should not be considered as an official interpretation, defamatory or interference of any legislation, laws or policies of any country including Tanzania. The contents of this paper should not under any circumstances be reproduced or used without our express written consent. It should not be considered as a legal advice to any of its recipient(s) and should not be relied upon without obtaining further legal advice. We accept no liability for any loss occasioned or suffered due to the contents of this paper.