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Tanzania’s trade deficit widens 24 per cent

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Tanzania’s trade deficit widens 24 per cent

Tanzania’s trade deficit widens 24 per cent
Bank of Tanzania Twin Towers. Photo credit: East AFRITAC

Tanzania’s current account deficit – meaning that the country’s economy is functioning on borrowed means – widened by 24 per cent in the year ending June 2014 as the country experienced an increase in imports of goods and services, Bank of Tanzania (BoT) has said.

According to its June Monthly Economic Review, the deficit increased from $3.983 billion at the end of May 2013 to $4.939 billion this May.

The value of imports of goods and services was $14.050 billion, an increase of 10.7 per cent compared to the amount recorded in the year ending May 2013.

With the exception of machinery goods and food and foodstuffs, all other items increased but much of it was registered in oil imports.

On the other hand, the value of exports increased by 4.4 per cent to $8.833 billion compared with the amount recorded in the previous year.

With the exception of travel and manufactured goods, all other major exports recorded declines.

Gold exports that used to be the leading foreign exchange earner declined from $1.975 billion to $1.745 billion in the same period.

Its position is now replaced by travel or tourism which climbed from $1.767 billion to $1.956 billion.

“The widening of the current account deficit was mainly on account of an increase in imports of goods and services, coupled with a decrease in current transfers,” says the central bank in the report.

Traditional exports which include cashews, coffee, cotton and tea also slowed from $852.4 million to $843.2 million as both their volumes and prices tumbled in the world market.

However, the overall balance of payments recorded a surplus of $197.4 million, lower than a surplus of $648.6 million recorded in the year ending May 2013.

Gross official reserves amounted to $4.486 billion as at end of May 2014, sufficient to cover 4.4 months of projected imports of goods and services excluding those financed by foreign direct investments.

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