TANZANIA's current account deficit continued to narrow last year as earnings from tourism increased and imports declined. Presenting the state of the economy in Parliament yesterday, the Minister for Finance and Planning, Dr Phillip Mpango, said the current account deficit narrowed by 43.8 per cent in 2017 on increase in earnings from tourism and a decline in imports.
He said the current account recorded a deficit of 1,210.5 million US dollars, down from a deficit of 2,154.6 million US dollars in 2016. The balance of payment recorded a surplus of 1,649 million US dollars last year, compared to a surplus of 305.5 million US dollars in 2016.
A balance of payments surplus means the country exports more than it imports, while a balance of payments deficit means the country imports more goods, services and capital than it exports and must therefore borrow from other countries to pay for its imports.
Foreign account reserves reached 5,906.2 million US dollars compared to 4,325.6 million US dollars in 2016. The amount was sufficient to cover 5.4 months of imports, exceeding the threshold set for East African integration of at least 4.5 months.
The increase was a result of measures taken by the Central Bank through purchase of US dollars in the market, disbursement of external non-concessional loans as well as decrease in imports of goods and services.