THE government has affirmed that it continues to implement a range of measures to curb high-interest loans, aiming to protect citizens from hazardous borrowing practices. Among these efforts is strengthening oversight of the financial sector through the Bank of Tanzania (BoT).

Deputy Minister of Finance, Mshamu Ali Munde made the remarks in the National Assembly yesterday while responding to a question from Kigamboni MP Nyakisa Sanga who sought clarification on the steps the government is taking to ensure citizens—particularly salaried employees—are not overburdened by exorbitant loan interest rates.

The deputy minister explained that, in collaboration with the BoT, the government is closely monitoring financial institutions to ensure compliance with laws, regulations, and guidelines governing lending practices.

Responding to a specific question on when Tanzanian employees might see interest rates on loans reduced to 7 or 8 percent, Munde emphasised that, under the country’s economic policy, interest rates offered by financial institutions are determined by market forces. He said the government cannot directly instruct institutions to set specific interest rates for certain groups of borrowers.

“Interest rates in the country are set by the market. Any government directive compelling financial institutions to set particular rates for employees or any other borrowers would contradict the principles of a free market economy,” Munde said.

He further clarified that financial institutions retain the freedom to set lower interest rates, including rates of 7 per cent or less, if they consider it appropriate.

Additionally, employees, either individually or through their employers, have the opportunity to negotiate directly with banks to agree on suitable lending rates.

Munde stressed that the government will continue to improve the country’s financial environment, with the goal of ensuring access to loans with favourable and productive terms for citizens, while upholding the principles of a free-market policy framework.