Tanzania’s 12-month current account gap shrinks 22.5% y/y at end-June

By bne IntelliNews August 12, 2015

Tanzania’s current account gap for the year to end-June narrowed by 22.5% y/y to $4.09bn on the back of rising exports and shrinking imports, the country’s central bank said in its latest monthly economic review.

Exports of goods and services grew 9.4% y/y to $9.4bn in the 12-month period, whereas imports fell 4.3% y/y to $13.37bn, resulting in a 26.1% contraction of the deficit on the goods and services account to $3.97bn.

Tourism remained the country’s main source of foreign exchange earnings, with travel receipts of $2.2bn, up 11.5% y/y on the back of growing number of tourist arrivals. Exports of manufactured products rose 14% y/y to $1.32bn and that of traditional exports, which include tobacco, coffee, cotton, cashew nuts, and tea, among others, increased 8.6% y/y to $907.7mn. On the other hand, the value of gold exports dropped 16.8% y/y to $1.23bn amid weak bullion prices and lower volumes.

The improvement in the trade and services balance was partly offset by a 7.2% expansion of the primary income deficit and a 22.7% contraction in the secondary income surplus. Inflows to the government, which comprise grants and loans, remained significantly lower y/y, reflecting smaller program grants from development partners. Tanzania is one of Africa's biggest per-capita aid recipients. A group of 12 international donors withheld in October 2014 budget support pledges worth nearly $500mn following a corruption scandal in the energy sector.

In June alone, Tanzania recorded a current account gap of $546.1mn, up 58% m/m, but down 13% y/y. The data suggests that some donors have restored budget support.

The Bank of Tanzania disclosed also that its gross official foreign exchange reserves widened 13.7% m/m to $4.4bn at end-June, sufficient to cover 4.2 months of projected imports of goods and services excluding those financed by foreign direct investment (3.7 month at end-May). At the same time, the gross foreign assets of banks stood at $1.04bn, up 4% from end-May.

$bn year to end-June 2015 year to end-June 2014 y/y change June 2015 May 2015 June 2014 June, m/m change June, y/y change
CURRENT ACCOUNT BALANCE -4 093.8 -5 281.2 -22.5% -475.8 -300.6 -546.1 58.3% -12.9%
Trade balance -4 944.7 -6 098.7 -18.9% -485.1 -344.9 -567.0 40.6% -14.4%
-exports of goods 5 714.7 5 248.4 8.9% 501.8 444.0 386.6 13.0% 29.8%
-imports of goods 10 659.5 11 347.1 -6.1% 987.0 788.8 953.6 25.1% 3.5%
Services balance 971.1 721.9 34.5% 61.7 65.9 38.3 -6.4% 60.8%
-receipts 3 681.8 3 340.9 10.2% 291.5 271.4 249.7 7.4% 16.7%
-payments 2 710.7 2 619.1 3.5% 229.8 205.5 211.4 11.8% 8.7%
Goods and services balance -3 973.6 -5 376.9 -26.1% -423.5 -279.0 -528.7 51.8% -19.9%
-exports 9 396.5 8 589.3 9.4% 793.3 715.4 636.3 10.9% 24.7%
-imports 13 370.1 13 966.2 -4.3% 1216.8 994.3 1165.0 22.4% 4.4%
Primary income balance -694.9 -648.1 7.2% -90.6 -44.9 -41.3 101.8% 119.4%
-receipts 121.3 123.7 -1.9% 9.0 6.9 10.6 30.4% -15.1%
-payments 816.1 771.9 5.7% 99.5 51.8 51.9 92.1% 91.7%
Secondary income balance 574.7 743.9 -22.7% 38.3 23.2 23.9 65.1% 60.3%
-inflows 650.8 800.0 -18.7% 41.8 29.4 29.1 42.2% 43.6%
--general government 289.9 439.0 -34.0% 12.7 0.1 0.0 12600% n.a.
-outflows 76.1 56.2 35.4% 3.6 6.2 5.2 -41.9% -30.8%
Source: Bank of Tanzania                

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