Tanzania: High Commodity Prices Widen Current Account Deficit

The Central Bank has said Tanzania's current account recorded a deficit of 3,369.2 million US dollars in the year ending April compared to 1,513.6 million US dollars owing to high imports following an increase in commodity prices.

According to the Bank of Tanzania (BoT) monthly economic review for May, the external sector experienced shocks arising from the war in Ukraine, sanctions on Russia, and the resurgence of the Covid-19 pandemic.

The exports of goods and services increased to 10,616.8 million US dollars during the year ending April higher than 8,560.5 million US dollars in 2021, driven by both traditional and non-traditional exports as well as the services receipts.

During the period, the exports of goods improved by 10.6 per cent to 7,030.2 million US dollars with both traditional and non-traditional exports rising by 21.9 per cent and 8.6 per cent, respectively.

The BoT report shows that the rise in exports of non-traditional goods was observed in textiles, paper and paper products, iron and steel, horticultural products and cereals, particularly rice and maize.

Gold exports, which accounted for 38.5 per cent of goods exports, declined by 10.8 per cent to 2,703.6 million US dollars owing to a slowdown in production.

On a month-to-month basis, the export value of non-traditional goods was 539.9 million US dollars slightly higher than 513.6 million US dollars registered during the year ending April 2021.

The increase in exports of traditional goods was recorded in cloves, coffee, cotton and tobacco. The rise in values of traditional exports is attributed to the recent spikes in world commodity prices.

Noteworthy, the significant increase in the value of cloves export is bolstered by higher world market prices and stockpiling of cloves that occurred when clove prices were lower.

On a monthly basis, traditional exports rose to 22.3 million US dollars from 16.1 million US dollars in April 2021. Services receipts increased to 3,431.1 million US dollars from 2,202.7 million US dollars in the year ending April 2021, supported by receipts from travel and transport.

Travel receipts amounted to 1,543.2 million US dollars from 737.3 million US dollars consistent with a rise in the number of international tourist arrivals from 552,390 to 1,015,233.

The increase in travel (tourism) earnings reflects a revamping tourism sector from the effects of the Covid-19 pandemic, though the recovery is threatened by the ongoing war in Ukraine, whereas about 15 per cent of total visitors come from the Eastern Europe4. Monthly services receipts were 283.6 million US dollars compared to 201.1 million US dollars in April 2021.

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