Oil price fall ‘good for economy’

An oil terminal in southern Nigeria. The World Bank has warned that falling crude oil prices may not be good for exploration activities but will greatly benefit importing countries. PHOTO | PIUS UTOMI EKPEI |  AFP

By Alawi Masare, The Citizen Reporter

In Summary

The value of Tanzania’s oil imports dropped from $4.57 billion in the year ending November 2013 to $3.67 billion in the year ending November 2014, according to the Bank of Tanzania December economic review.

Dar es Salaam. The recent fall of oil prices in the world market has sent a positive note to Tanzania’s balance of payments with the country’s current account narrowing by 11 per cent in the year ending November 2014.

Oil accounts for 34 per cent of the country’s imports, the largest share of all imported goods.

The value of Tanzania’s oil imports dropped from $4.57 billion in the year ending November 2013 to $3.67 billion in the year ending November 2014, according to the Bank of Tanzania December economic review.

The deficit in the current account measures a country’s trade in which the value of goods and services it imports exceeds the value of goods and services it exports. The narrowing of the deficit was influenced by increased export value as well as declining of the value of imports.

The value of exports of goods and services was $8.515 billion in the year to November 2014 against $8.479 billion recorded a year before while the value of imports of goods and services decreased by 6.1 per cent to $13.437 billion.

“The value of oil imports decreased by 19.7 per cent mainly due to a fall in oil prices in the world market and volume of imported oil,” the central bank said. Other imported goods that reduced during the year include machinery; transport, building and construction equipment, fertilisers as well as food and foodstuff.

Tanzania exports traditional products like coffee, cotton, cloves, tobacco, cashew nuts and sisal which, together, slowed to $785.1 million during the same period compared with $867.1 million recorded a year before. Gold exports fell to $1.297 billion in the year ending November 2014.

from $1.718 billion a year before.

Tourism, the country’s largest foreign exchange earner, brought in $1.933 billion during the period compared with $1.851 previously.

BACKGROUND: FALLOF OIL PRICES

Global oil prices have fallen sharply over the past seven months. Crude oil prices have more than halved to below $50 a barrel for the first time since May 2009 and US crude is down to below $48 a barrel.