Tanzania recorded a surplus of US$327.3 million in its overall balance of payments, compared with a deficit of US$202.0 million recorded in 2011, thanks to an increase in export volumes for most of its traditional commodities in 2012, the Bank of Tanzania said.
This, according to the bank’s new economic review, reflected a continued net increase of inflows in the form of capital grants, foreign direct investments and foreign borrowing.
During the year ending December 2012, the current account deficit stood at US$3.4 billion compared to US$3.977 billion recorded in 2011.
“This performance resulted in an increase of gross official reserves from US$3.7 billion in December 2011 to US$4.0 billion in December 2012,” said the report, which also affirmed that at that level of reserves, Tanzania had sufficient cash to cover about four months of imports of goods and services.
In 2012, the value of Tanzania’s exported goods and services amounted to US$8.6 billion compared with US$7.3 billion recorded a year earlier.
Increased receipts from travel, traditional and non-traditional exports accounted for this development, the report said, explaining that improved production for most of the agricultural commodities following favourable weather conditions boosted export volumes.
Traditional cash crops included coffee, cotton, cloves, sisal and tobacco, fish and fish products as well as horticultural products.
Average commodity prices on world market last year increased,except for coffee and cotton.
The decline in the price of coffee was largely explained by prospects of raised yields in Brazil and Vietnam following favourable weather conditions.
Having reached a peak in 2011, the price of cotton dropped sharply in 2012 on account of low global demand.
Meanwhile, the price of cloves improved further as a result of a decline in production after an outbreak of clove disease in Indonesia. But improved global demand for sisal saw its price rising.
Regarding non-traditional exports, the bank said their value totalled US$4.2 billion, which was 13.2 percent higher than the level recorded during 2011.
However, gold exports recorded a marginal decline of 2.4 percent to US$2.1 billion in 2012 due to a fall in export volumes, though prices of the metal on the world market remained high.
In the meantime, Tanzania’s services receipts up to end of 2012 were US$2.7 billion compared with US$2.3 billion recorded in 2011.
“This performance was largely attributed to improvement in receipts from travel and transportation,” said the report, noting that “the number of tourist arrivals has been on a steady increase despite the Euro zone crisis.”
Despite its minimal gain in its overall balance of payments, Tanzania spent more on importation of goods and services last year.
The value of imported goods and services was US$12.6 billion or 5.3 percent above the level recorded in 2011. The bank explained that the increase was largely attributed to high prices of oil imports.
In addition, services payment amounted to US$2.3 billion, compared with US$2.2 billion recorded in 2011.
“This development was on account of an increase in payments for transport services particularly sea freight and travel expenses,” the report said.
Average prices of crude oil and white petroleum products increased partly due to political instability in North Africa and the Middle East.
Likewise, the price of gold increased mainly due to weakening of the US dollar against other major currencies, which in turn increased the demand for gold as a safe investment, the report added.