…Nation has 5 Months Worth of Imports, far above target of 4 months.
By TZ Business News Staff.
Tanzania foreign exchange reserves have increased by 3.1% in the third quarter of 2019, a sign of increased foreign income using December 2018 reserves as base.
It was not immediately possible to establish source of the increase but figures available indicate foreign exchange reserves have increased from USD 5.044 billion in December 2018 to USD 5.2 billion this August, 2019.
“The country has adequate foreign exchange reserves, currently at $5.2 billion. The reserves can be used to import goods and services for 5 months and one week (5.1 months of import cover), far above the target of 4 months,” Director of Economic Research and Policy at the Bank of Tanzania, Dr. Suleiman Misango has told TZ Business News in a WhatsApp message.
Dr. Misango is also Chairman of the Board of Directors at the Tanzania Revenue Authority (TRA).
The current reserves compare favorably to levels in December 2018 when Dr. Misango told a section of the media that Tanzania had spent some of its foreign exchange to service foreign debt and to stabilize the local market through foreign currency sales.
Bank of Tanzania monthly reports showed in late 2018 that foreign reserves had shrunk from USD 5.437 billion (equivalent to 5.3 months of imports) in September 2018, down to USD 5.277 billion in October (equivalent to 5.2 months of imports). The reserves further dropped to USD 5.044 billion in December, 2018.
A country is considered economically stable in macro-economic terms if foreign reserves are sufficient to purchase imports for three to six months according to experts, which means Tanzania was still ‘in the black’ last year.
The current rebound at USD 5.2 billion (equivalent to 5.1 months of imports) is close to levels in October 2018. It could not immediately be explained, but it can mean improved export performance.
The reserves are in the meantime the topic of heated debate on Twitter here in Tanzania as politicians struggle to turn the subject into political capital.
Zitto Kabwe Ruyagwa, the Member of Parliament for Kigoma Urban on the ACT Wazalendo party ticket has posted a Twitter warning the country’s foreign reserves have dwindled to 4.3 months of imports.
Mwigulu Nchemba, the member of Parliament for Iramba West in Singida region on the ruling CCM party ticket has fired back; also on Twitter:
“Mr. Zitto, you are an economist; is it true you do not know structrural and seasonal effects on reserves?…the international level, as required by the World Bank is only three months (three months of imports),” Nchemba has told his fellow parliamentarian.