Young fortune seekers. Human Rights Watch says child labour is rampant in Tanzania�s artisanal gold mines. (File photo)
In the period under review, the current account, which are a
country’s non-capital transactions improved after the previous deficit
narrowed by 16.6 per cent to US$4.34 billion.
“This development was on account of increase in exports of goods
and services coupled with a decline in imports,” the Bank of Tanzania
(BoT) said in its latest review of the economy, which was released
yesterday.
During the year ending July 2015, the current account balance
narrowed by 16.2 per cent to a deficit of US$4.44 billion compared with
the corresponding period in 2014.
The balance of payment in the year ending July 2015 recorded an
overall deficit of US$292.8 million. During the same period in 2014,
Tanzania’s transactions with the outside world had a surplus of US$280.8
million.
“The overall balance of payments recorded a deficit of US$233.1
million (in the year ending August 2015) compared to a surplus of US$25
million in the year ending August 2014,” the central bank said in the
September monthly economic review (MER).
The deficit means that the government’s foreign exchange reserves
were depleted by US$208.1 during the period, which is the difference
between the surplus recorded in the year ending August 2014 and the
US$233.1 million deficit.
BoT attributes the deterioration to the capital and financial accounts.
The former is all international capital transfers recorded during
the review period. This refers to the acquisition or disposal of
non-financial assets (for example, a physical asset such as land) and
non-produced assets, which are needed for production but have not been
produced, like a mine used for the extraction of diamonds.
On the other hand, the financial account refers to international
monetary flows related to investment in business, real estate, bonds and
stocks. It also includes government-owned assets such as foreign
reserves, gold, special drawing rights (SDRs) held with the
International Monetary Fund (IMF), private assets held abroad and direct
foreign investment.
“Gross official reserves amounted to USD$4,191.9 million as at the
end of August 2015, sufficient to cover 4.0 months of projected imports
of goods and services, excluding those financed by foreign direct
investment.
Meanwhile, gross foreign assets of banks stood at US$1,199.9 million,” BoT noted in the MER.
At the end of July 2015, the foreign exchange which Tanzania had
for meeting its external obligations such as debt service and
importations amounted to US$4,229.3 million. The amount was enough to
cover smooth importation of goods and services for four months.
The MER has it that the value of export of goods and services was
US$9,363.8 million in the year ending August 2015, an increase by 9.8
per cent from the corresponding period in 2014.
The import bill decreased to US$13,478.1 million from US$13,733.4 million in the year ending August 2014.
The improved export trade performance was mainly on account of
increase in travel (tourism) receipts, export of manufactured goods as
well as traditional exports. Travel trade brought in US$2.21 billion
against the previous year’s earnings of US$1.96 billion.
In the year ending July 2015, it injected the same amount of foreign exchange into the national economy.
Manufactured goods raked in US$1.31 billion compared to the
previous earnings of US$1.16 billion. Foreign exchange earned from
traditional exports improved slightly to US$858.4 million from US$835.6
million.
Former cash cow gold continued to perform dismally. Whereas in the
year ending August 2013, it accounted for 47.7 per cent of all the
non-traditional exports, this year the share has slipped to 31.9 per
cent.
The export of the precious metal fetched US$1.29 billion compared
to US$1.39 billion in the year ending August 2014, where its share of
non-traditional export earnings was 38.2 per cent.
Gold earnings have been declining because of decrease in both
exported volumes and world market prices. Yesterday, the metal was
quoted at US$1,171.75 an ounce in the morning, after losing about 1.2
per cent in the past three sessions.
Reuters reported that it struggled after three days of losses
yesterday, hurt by a stronger dollar and fears the Federal Reserve could
still raise US interest rates this year.
Gold touched a 3-1/2-month high last week on bets the Fed would not raise US rates amid concerns about the global economy.
“The value of goods import declined by 3.0 per cent to US$10,753.3
million, mainly driven by a decrease in import value of intermediate
goods, particularly oil,” BoT notes in the MER. “Despite the decline,
oil remained dominant accounting for about 29 per cent of goods import.”
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