TANZANIA’S external sector performed satisfactorily, amidst slow global growth resulting from a variety of factors, including heightened trade restrictions and tariffs between US and China, Brexit uncertainties and geopolitical tensions.
The balance of payments according to the Bank of Tanzania (BoT) Annual Report 2018/19 was in a comfortable position, albeit turning into a deficit of 990.7 million US dollars in 2018/19 compared to a surplus of 627.9 million US dollars in the preceding year.
The current account also continued to be in a good position, but widened to a deficit of 2,645.3 million US dollars from a deficit of 1,771.8 million US dollars due to increase in imports of capital goods for infrastructure projects, decline in exports due to low global demand and decline in official transfers.
The current account deficit was 4.5 per cent of GDP, virtually similar to recent historical trend and is expected to narrow upon completion of the major infrastructure projects.
Despite importation of capital goods for infrastructure projects, foreign official reserves remained adequate and evolved above the country and EAC benchmarks throughout the year.
However, towards the end of the year, the reserves declined, reaching 4,401.5 million US dollars at the end of June 2019 from 5,483.9 million US dollars in June 2018.
The reserves were adequate to cover about 4.3 months of projected import of goods and services. The import cover was above the benchmark of not less than 4 months.
The deficit on goods and services account widened to 2,199.8 million US dollars from 1,253.5 million US dollars in 2017/18 largely because of increase in imports of goods and services.
Export of goods and services amounted to 8,561.6 million US dollars, nearly similar to 8,588.5 million US dollars in 2017/18.
Merchandise (goods) exports declined by 4.2 per cent to 4,493.6 million US dollars driven by all traditional export crops, except coffee and cotton, which increased significantly.
Non-traditional exports increased to 3,569.7 million US dollars from 3,140. 1 million US dollars, with export of gold accounting to 48.8 per cent having increased by 18.7 per cent to 1,743.4 million US dollars.
The increase in gold export was attributed to monitoring and enforcement measures to ensure transparency in production and marketing of gold.
Foreign exchange receipts from export of services, which includes tourism, increased to 4,068.0 million US dollars in 2018/19 from 3,896.6 million US dollars in the preceding year, and accounted for nearly a half of total exports of goods and services.
Foreign exchange from travel, which is mainly from tourism, grew by 7.4 per cent to 2,488.1 million US dollars, because of increase in the number of tourist arrivals.
Receipts from travel accounted for more than 60 per cent of total services receipts.
The performance of travel has been progressively improving, together with transportation and other services.
