Tanzania Current Account narrows by 50 pc in one year

Bank of Tanzania headquarters

By Mnaku Mbani

The Tanzania current account narrowed by more than half to a deficit of $1.885 billion during the year ended in June this year from $4.34 billion recorded during the year ended in June last year.

According to the Bank of Tanzania Monthly Economic Review for July shows that the narrow of the current account is a result of improved performance of non-traditional exports and services coupled with a decline in imports, particularly oil.

The review shows that during the period under review exports of goods and services improved by ten per cent to US$6.2 billion during the year ended in June this year from $5.62 billion recorded during the year ended in June 2015.

“In fact, a large part of the improvement occurred in travel (which is mainly tourism), manufactured goods and gold.  However, foreign exchange earnings from traditional exports were lower than in the corresponding period in 2015,” says Bank of Tanzania.

The review shows that the value of traditional exports dropped by 8.8 percent to USD 828.0 million, driven by volume and prices. Notably, cotton and cashew nut declined on account of both volume and prices, while tobacco recorded low export value following a decline in price.

The fall in prices of these traditional export crops was consistent with the general decline in commodity prices in the world market. The increase in global production was a major contributing factor.

Export of cotton also declined, but this was due to low production during 2015/16 crop-season following unfavourable weather and delays in procurement and application of inputs.

By contrast, foreign exchange earnings from export of sisal and coffee increased, the former owing to a rise in both volume and prices and the later manifested only in export volume.

Earnings from services amounted to USD 3,860.4 million compared with USD 3,681.8 million recorded in the year ending June 2015, contributed largely by receipts from travel and transportation services while travel receipts increased by 3.5 percent to USD 2,274.7 million, as the tourist arrivals reached as high as 1,152,053 from 1,088,600 in the year ending June 2015. Transport receipts recorded an increase of 14.7 percent to USD 1,107.0 million.

The imports of goods and services went down by 17 per cent to $8.8 billion during the year ended in June this year from $10.6 billion recorded during the year ended in June 2015.

The decline was notable in all goods import, save for fertilizers but a significant decline was recorded in capital goods, oil, and food and food stuffs.