CALENDAR OF IMPORTANT MONETARY AND ECONOMIC POLICY EVENTS

CALENDAR OF IMPORTANT MONETARY AND ECONOMIC POLICY EVENTS 1995 Jan: Effective January 2, the Statutory Minimum Reserve (SMR) Requirement was increased from 12.0 percent to 15.0 percent for all deposit liabilities, excluding foreign currency deposits; vault cash counts as part of SMR. 1995 Jan: On January 25, the Bank of Tanzania introduced the TZS 10,000 and TZS 5,000 notes. 1995 Mar: On March 8, the Finance Minister, Hon. Jakaya Kikwete (MP), inaugurated Capital Market Securities Authority, at the Bank s Headquarters. 1995 Apr: On April 1, the Bank took over the management of Meridien Biao Bank Tanzania Limited, following the financial problems facing the Meridien Group. 1995 Jun: Effective June 1, the SMR was increased from 15.0 percent to 18.0 percent for all deposit liabilities, excluding foreign currency deposits; vault cash counts as part of SMR. 1995 Jul: The Bank of Tanzania Act, 1995 empowering the Bank with a single policy objective of price stability became effective on July 1. 1995 Aug: Beginning August 1, all banks and financial institutions were required to publish quarterly financial statements and audited annual financial statements in newspapers that circulate widely in Tanzania. On August, the Tanzania Housing Bank's Board of Directors, under section 27(1) of the Act No. 34 of 1972, which established that bank, decided to wind up the operations of the bank, putting the bank under liquidation. Effect August 24, the liquid asset ratio requirement, that banks and financial institutions should maintain liquidity assets of not less than 20 percent of shillings deposit liabilities and borrowing from the public and other demand liabilities, was abolished. Banks and financial institutions were required to maintain adequate liquid assets for meeting their normal requirements and the demands of their depositors and creditors. 1995 Sept: On September 20, commercial banks were allowed to hold up to 50.0 percent of their SMR requirements in Treasury Bills. This measure was aimed at enhancing financial intermediation in the economy and improving the liquidity position of commercial banks. 1995 Oct: On October 20, the SMR, was reduced from 18.0 percent to 12.0 percent of the outstanding balance of shilling deposits and borrowings from the general public. The reserves were to consist of balances in the SMR account maintained with the Bank and cash in vaults. 1

1995 Nov: Effective November 9, every bank and financial institution was required to determine and report on foreign exchange purchases, sales, maximum net open position, and average balances on weekly basis to the Bank. 1996 Jan: The Government adopted the cash budget system to reduce budget deficits and control inflationary spending. 1996 Apr: Effective April 1, the SMR was decreased from 18.0 percent to 12.0 percent for all deposit liabilities, excluding foreign currency deposits with; vault cash as part of the SMR. On April 1, the entitlement of commercial banks to hold up to 50.0 percent of their SMR in Treasury Bills was abolished. 1996 May: From May 15, the Bank began using 91-day Treasury Bills for liquidity management. 1996 Jul: The central payment system was introduced in five ministries in Tanzania. The Tanzania Revenue Authority (TRA) was established, in a bid to improve tax administration. From July 1, the credit ceiling on commercial banks' lending was abolished. From July 1, the Government reintroduced a 2.0 percent tax on Traditional Exports. On July 1, the 10.0 percent withholding tax on income from Treasury Bills and deposits was abolished. On July 15, the Government accepted the obligations of Article VIII Section 2, 3, and 4 of the IMF s Articles of Agreement. 1996 Sept: Effective 1st September, through circular no. 5, new Bank of Tanzania report form 16-4a on Foreign Exchange Exposure and Placements, Purchases, Sales, and Balances was introduced, to be submitted to the Bank on monthly basis. 1996 Nov: On November 8, the Government reached an agreement with the IMF for an Enhanced Structural Adjustment Facility (ESAF) program covering 1996/97-1998/99. Under this program the Fund would make available a total of SDR 161.6 million, (about USD 240.0 million) to be disbursed in six equal installments, within three years. 1997 Jan: On January 15, a TZS 50 coin was released into circulation. 2

Effective January 20, the SMR was reduced from 12.0 percent to 6.0 percent all deposit liabilities, excluding foreign currency deposits, whereby cash in vaults was excluded as part of SMR. On January 21, the Government of the United Republic of Tanzania (URT) met with the Paris Club creditors in Paris to consider debt relief for Tanzania. The creditor countries agreed to recommend to their Governments a treatment providing for debt reduction of up to 67.0 percent in net present value terms, in line with the Naples Terms agreed in December 1994. 1997 Feb: On February 20, the URT Government issued an order to harmonize customs tariffs between Mainland and Zanzibar for selected items. The order became effective following the publication of the Customs Tariff (Amendment) Order signed by the Minister for Finance Hon. Daniel Yona (MP) in the Government Gazette of January 24. 1997 Mar: Effective March 1, through circular no.1, Reserves against Deposits and Borrowings was amended. SMR was raised from 6.0 percent to 12.0 percent and included cash in vaults as part of available reserves. On March 10, new bank notes with a motif of a head of a giraffe for the TZS 500, 1,000, 5,000 and 10,000 denominations were released into circulation. 1997 Apr: From April 7-9, the 10th Conference of Heads of Financial Institutions was held in Arusha. On April 11, New Banking and Financial Institutions Regulations were gazetted and published following the review of the licensing procedures. 1997 July: Repurchase agreements transactions (REPOs) were introduced as a tool for finetuning liquidity in the economy. 1997 Oct: On October 10, Tanzania phased out the CD3 forms and introduced a Single Bill of Entry as a new measure for documentation of export transactions. 1997 Nov: Effective November 10, the SMR was set at 10.0 percent of total deposits including foreign currency deposits (FCD). Both SMR and clearing account balances count in determination of required reserves. The amount can be held in USD and/or TZS. 1998: The Government of Tanzania with assistance of donors established the Multilateral Debt Fund (MDF) for paying multilateral debts with the savings on the budget to be used to support expenditure in education and health sectors. 1998 Apr: Dar es Salaam Stock Exchange (DSE) started trading operations. 3

1998 Jun: Effective June 1, SMR was maintained at 10.0 percent of total deposits including FCD. Balances in the clearing account count in determination of reserve requirement and was to be held in TZS. 1998 Jul: Effective July 1, Value Added Tax (VAT) became operational to create, over the medium term, a foundation for achieving more growth oriented revenue structure with increased reliance on consumption taxes. 1998 Oct: The Bank allowed commercial banks to include 50.0 percent of vault cash in the calculation of SMR. 1999 Apr: Beginning April 1, the Bank took over the management of Greenland Bank (T) Ltd due to poor financial performance. 1999 Oct: The debt buyback operation was launched on 25th October, following approval by the World Bank to grant Tanzania USD 40.2 million from the Debt Reduction Facility for IDA only countries. The scheme was supposed to deal with private uninsured debt. 2000 Jan: Effective January 15, SMR was kept at 10.0 percent and 50.0 percent of vault cash was used in the computation of SMR however balances in the clearing account were excluded in SMR. 2000 Mar: At end-march, Tanzania reached a Decision Point and qualified for consideration for debt relief under Highly Indebted Poor countries (HIPC) Program, after the IMF approved Tanzania's three year Poverty Reduction and Growth Facility (PRGF). 2000 Apr: On April 14, Agreed minutes were signed in relation to Tanzania's qualification for the Paris Club VI rescheduling arrangement. Under this arrangement Tanzania will be treated under Cologne terms, which provide cancellation of 90.0 percent of the debt service due up to the Completion Point of the enhanced HIPC Initiative. 2000 May: On May 15, the Bank took over the management of First Adili Bancorp due to its poor performance and shareholders inability to inject more capital in the bank to cover heavy losses sustained in its operations. 2000 July: The Bank shifted from calculation of simple average interest rates to weighted average interest rates of commercial banks. The Bank shifted its focus from extended broad money (M3) as a monetary policy intermediate target to broad money (M2). 2000 Sept: On September 1, the Liquid Assets Ratio Regulation, 2000 became effective. 4

On September 1, the Publication of Financial Statements Regulations, 2000 were officially operational. On September 1, the Independent Auditors Regulations, 2000 became operational. On September 1, Circular No. 8: The Money Laundering Control became effective and aims at guiding banks and financial institutions on uncovering, reporting and controlling money laundering. 2000 Oct.: Effective October 1, Tanzania pulled out of the Common Market for East and Southern Africa (COMESA). 2001 Jan: Effective January 1, the petroleum sector was fully liberalized and the Government stopped extending subsidies to Tanzania Petroleum Development Corporation (TPDC). The Heads of State of Tanzanian, Kenyan and Ugandan, on January 15, formally inaugurated the East African Community (EAC) in Arusha. 2001 Feb: The Government launched a National Microfinance Policy (NMP) on February 2 that lays out principles to upgrade services through efficient and effective micro-finance systems. It had been approved by Cabinet in May 2000. 2001 Mar: From March 26-28, the 1 st Annual National Conference on Microfinance was held in Arusha. 2001 May: The Management of Risk Assets Regulations, 2001 came into effect on May 1 and repealed "The Guidelines on Management of Risk Assets, Classification of Loans and Other Risk Assets, Provisioning for Losses and Accrual of Interest" issued on October 18, 1991. The Capital Adequacy Regulations, 2001 became effective on May 1 and repealed "Guidelines for Measuring Capital Adequacy" issued on October 1, 1993 and the Addendum to Circular No. 3 on Capital Adequacy issued on March 27, 1996. The Credit Concentration and Other Exposure Limits Regulations, 2001 came into effect on May 1 and repealed "The Guidelines on Concentration of Credit and Other Exposure Limits" issued on December 22, 1992. 2001 Jun: The first closing of the Tanzania debt buyback operation took place on June 6, with debt worth about USD 155.7 million (principal and interest) being retired utilizing about USD 7.2 million from the grant. The first closing of the operation represented an important step towards the implementation of the Government s debt reduction strategy. 5

2001 Sept: The Bank established an Export Credit Guarantee Scheme (ECGS) to hasten the provision of credit to the export sector, notably non-traditional exports in order to augment efforts towards increased export earnings. 2001 Nov: On November 8, Tanzania reached Enhanced HIPC Completion Point after successful implementation of sound macroeconomic and structural adjustment policies. The debt relief under the HIPC Initiative is expected to be USD 2,026.3 million in Net Present Value or USD 3.0 billion in Nominal terms and will be delivered over twenty years period. 2002 Jan: On January 17, Tanzania exited from debt rescheduling arrangement with Paris Club creditors and received 90.0 percent stock of debt cancellation and rescheduling of the remaining 10.0 percent under Paris Club VII (Cologne) terms. Debt worth USD 737.0 million is scheduled for cancellation. On January 31, Tanzania Association of Microfinance Institutions (TAMFI) was officially launched. 2002 Feb: The Government launched a 5-year Treasury Bond. The main objectives were to raise funds to meet redemption of long-term bonds, promote capital markets and extending the yield curve. 2002 Mar: The 5-year Treasury bond was listed at the DSE. 2002 Apr: The Export Processing Zones (EPZ) Bill was enacted by Parliament and was expected to be effective on July 1 2002. The Act mandates the National Development Corporation to initiate, develop and manage operations under the EPZ program. Effective April 1, all new Treasury bonds are listed at the DSE. The Bank switched the 2-year Treasury Bond auctions from uniform prices to multiple prices. 2002 May: The Government of Tanzania appointed M/S Group Solutions of South Africa, as the new management team for TANESCO as part of re-organising TANESCO and restructuring of the electricity industry. The Bank in collaboration with the Ministry of Finance, converted unsecuritized domestic debts worth TZS 20.0 billion into marketable securities. 6

2002 Jun: The Government announced its intention to open up the DSE to foreign participation effective October 1, 2002 to enable Tanzanian companies to secure investible financial resources from outside the country. 7