Net inflows of capital grants, foreign direct investment and foreign borrowing enabled Tanzania to narrow its current account deficit in April 2013 to US$3.9 billion, compared to US$4.5 billion in the corresponding period last year, according to the Bank of Tanzania.
“The lower deficit was a result of a rise in the value of exports of goods and services, coupled with a decline in the value of imports,” the bank said in its latest Monthly Economic Review.
While a deficit of US$236.4 million was recorded in the year ended April 2012, the overall balance of payments at the end of April this year had a surplus of US$797.3 million.
Tanzania’s external debt, however, did not ease as new disbursements saw the debt stock rising in April to US$11.8 billion with an increase of US$104.8 million.
But gross official reserves amounted to US$4.3 billion as at end of April 2013, sufficient to cover projected import of goods and services for slightly over a four-month period.
Meanwhile, the value of exported goods and services amounted to US$8.3 billion during the year ending April 2013, compared to US$7.6 billion recorded during the year ended April 2012.
According to the central bank, the improved performance was attributed to an increase in receipts from traditional exports, manufactured goods and travel.
Non-traditional exports amounted to US$4 billion in the year ending April 2013, compared with US$3.9 billion recorded in the corresponding period in 2012.
With the exception of gold, all other non-traditional exports went up and much of the increase was recorded in manufactured goods, which accounted for over US$1 billion, compared to US$886 million recorded up to April 2012.
The Bank of Tanzania explained that gold’s under-performance was associated with a fall in export volume to 37 metric tons, compared to 39.3 metric tons in the preceding period.
Gold price declined due to the strengthening of the US dollar against other major currencies, which in turn reduced demand for gold as a safe investment.
On world commodity prices, the bank said the price of cotton declined mainly due to a fall in demand for cotton from China, India and Pakistan; while the price of Robusta coffee declined largely due to increased supply from Brazil and Vietnam, but the price of Arabica coffee remained unchanged.
Also, Tanzania’s tea prices declined largely due to supply factors following favourable weather condition in major tea growing countries namely Kenya, Australia and India.
Prices for cloves and sisal remained unchanged at US$1,400 per metric ton and US$9,500 per metric ton respectively.