Tanzania Current Account narrow

By Mnaku Mbani

The current account balance recorded a deficit of USD 1,843.8 million compared to USD 4,797.5 million registered in the corresponding period in 2015.

According to Bank of Tanzania Monthly Economic Review for November, this outturn was mainly attributed to a decrease in imports of goods and services coupled with increase in exports of goods and service.

As at end of October 2016, the stock of gross official reserves amounted to USD 4,050.9 million, sufficient to cover 4.1 months of projected imports of goods and services excluding those financed by foreign direct investment.

In the same period, the gross foreign assets of banks stood at USD 775.5 million. During the year ending October 2016, the value of exports of goods and services was USD 9,479.0 million, being 7.5 percent higher than the amount recorded in the corresponding period in 2015.

The development was attributed to good performance in exports of traditional commodities, gold as well as increases in travel receipts.

During the period, the value of traditional exports increased marginally by 1.4 percent to USD 849.9 million from USD 837.9 million recorded in the corresponding period in the preceding year. The performance was largely driven by increased export value for all crops except for coffee and cashew nuts.

Export values of some crops, including cotton and tobacco increased due to the increase of both volume and price, while sisal and tea increased due to price effect.  Cashew nuts recorded a significant decline following a fall in both volume and average unit prices while coffee declined due to fall in unit price.

Value of imports of goods and services amounted to USD 10,692.3 million at the end of October 2016 compared with USD 13,231.1 million recorded in the corresponding period in 2015 (Table 4.1). With the exception of oil and industrial raw materials all other categories of imports recorded a decline.

The decline in imports was partly attributed to exchange rate depreciation particularly due to demand for consumer goods and completion of major projects such as construction of cement factory, power plants and exploration activities which partly led to the decline in imports of capital goods.

During the period, oil import which is the dominant item in imported merchandize, improved by 1.7 percent to USD 2,975.7 million due to increase in volume of imported oil that offset the fall in prices.