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%|
|-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%|
|Secondary income balance||574.7||743.9||-22.7%||38.3||23.2||23.9||65.1%||60.3%|
|Source: Bank of Tanzania|
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