26 December 2012

Tanzania: Zanzibar Current Account in Deficit

Photo: futuradosmil/Flickr
Tanzania Currency: Government cautioned against borrowing from local commercial banks.

ZANZIBAR current account recorded a deficit of 46.9 million US dollars (about 75.04bn/-), compared to a deficit of 30 million US dollars (48bn/-) registered in the corresponding period last year, due to increase in import bill associated with the importation of new marine cable for improvement of electricity in the Isles.

The deficit in goods account, according to the Bank of Tanzania (BoT) monthly economic review for October this year, widened to 149.9 million US dollars, (about 239.84bn/-) compared to 94.8 million US dollars (about 151.68bn/-) recorded in the corresponding period in 2011.

The BoT report shows that total value of export of goods and services increased to 195.9 million US dollars (about 313.44bn/-) from 155.1 million US dollars (about 248.16bn/-) recorded in the previous year.

"The development was mainly due to an increase in volume of cloves exports from 1,500 tonnes in the year before to 3,500 tonnes during the year under review," stated the report. However, cloves average export price declined to 11,926.9 US dollars (about 19m/-) in the period under review from 12,186.1 US dollars (19.49m/-) per tonne in the year ending October 2011 per tonne.

In the meantime, the total value of imports of goods and services increased to 313.4 million US dollars from 219.1 million US dollars recorded in the corresponding period in 2011, mainly due to a rise in the value of capital goods for infrastructure developments.

The government budgetary operations on cheques issued basis, registered a deficit after grants of 13.8bn/-in October 2012, which narrowed to 5.9bn/- after adjustment to cash. The budget deficit was exclusively financed by foreign sources. Total resources amounted to 34.4bn/-, out of which 23.7bn/- was domestic resources and the balance was grants.

Revenue collection amounted to 23.7bn/- and was below the target of 24bn/-for the month. Tax collections amounted to 22.3bn/-, accounting for 94.1 percent of the total revenue collections. Tax on imports accounted for 25.2 percent, followed by VAT and Excise Duties while non-tax revenue was the least in terms of percentage contribution.

The government expenditure during the month under review, amounted to 48.1bn/-, out of which recurrent expenditure accounted for 49.1 percent and the balance was development expenditure. Wages and salaries and other charges amounted to 10.9bn/-and 12.7bn/-respectively.

The development expenditure amounted to 24.5bn/-above the estimate by 93.1 percent, mainly on account of increased inflows of foreign grants for development projects where foreign funded component accounted for 67.8 percent and the balance was local contribution.

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