… the ‘good economic performance’ is associated with increased tourism, increased gold exports and a reduced oil import bill– but inflation stalks the nation; the Tanzania Central Bank has promised to fight the pressure.
By TZ Business News Staff.
Tanzania reduced its current account deficit by 47% between January 2016 and January 2017, the Bank of Tanzania (BoT) has said in a statement made available to TZ Business News.
During the period under review, current account deficit narrowed “largely by increase in receipts from tourism gold and traditional exports, decrease in [the] import bill mainly of oil, consumer goods, building and construction, machinery and transport equipment,” the statement said.
The government’s official reserve amounted to US $4,331.7.6mn at the end of January 2017, which is about 4.2 months of projected imports.
Exports in 2016 grew by 4.1 per cent to US $9,285.6m, mainly driven by gold due to recovery of world market price and increase in export volume, travel receipts on account of increase in number of tourist arrivals and traditional goods consistent with increase in prices of some commodities in the world market.
The value of imports in 2016 was $10,774.5m, which is 13.9 per cent lower than the value for 2015. Imports were largely for machinery, transport equipment, building and construction materials and consumer goods. Value of oil imports declined by 4.9 per cent due to fall in the world market prices.
The statement refers to remarks made by the Central Bank Governor, Prof. Benno Ndulu on Thursday, 9 March, 2017 when he spoke to Chief Executive Officers (CEOs) of Tanzania’s commercial banks and financial institutions who met at the BoT head office in Dar es Salaam.
The CEOs were briefed about the economic trends nationally, regionally and globally. The Governor said Tanzania attained a 7 per cent GDP growth in 2016, which he described as “a good record in the region,” with the leading sector being mining and quarrying followed by transportation and storage, power generation and manufacturing.
Zanzibar recorded GDP growth of 4.4 per cent during the first three quarters of 2016 compared with 8.0 per cent in similar period of 2015. The decline in growth was attributed to decline in the slower growth in construction, and information and communication activities. Major contributors to growth were: arts and entertainments, finance and insurance, mining and quarrying and administrative and support services.
Inflationary pressure was noted, but the bank has a strategy to tackle it, he said. Headline inflation increased to 5.5 per cent in February 2017 from 5.2 per cent the previous month. He attributed the increase to food prices. The risk of upward inflationary pressures may persist in the coming few months due to rising food prices. The Governor said the Central Bank would continue to be cautious of the risk of inflationary pressures coming from the food supply outlook in the East African Community and Southern African Development Community SADC) and would be ready to take appropriate measures.
Drought throughout East Africa has sharply curbed harvests and pushed prices of cereals and other staple foods to unusually high levels, posing a heavy burden to households and especially posing special risks to pastoralists in the region, according to a recent FAO report.
Local prices of maize, sorghum and other cereals are near or at record levels in swathes of Ethiopia, Kenya, Somalia, South Sudan, Uganda and the United Republic of Tanzania, according to the latest Food Price Monitoring and Analysis Bulletin (FPMA).
The trend in East Africa, where prices of staple cereals have doubled in some town markets. Maize prices in Arusha, United Republic of Tanzania, have almost doubled since early 2016, while they are 25 percent higher than 12 months earlier in the country’s largest city, Dar Es Salaam.
In Kenya, where eastern and coastal lowlands as well as some western areas of the Rift Valley all suffered below-average rainfall, maize prices are up by around 30 percent, with the increase somewhat contained somewhat thanks to sustained imports from Uganda.
Cereal prices aren’t the only ones rising. Beans now cost 40 percent more in Kenya than a year earlier, while in Uganda – where maize prices are now up to 75 percent higher than a year earlier – and increasing around the key border trading hub of Busia, the prices of beans and cassava flour are both about 25 percent higher than a year ago in the capital city, Kampala.