Tanzania: Low Oil Prices to Lessen Pandemic Impact On Economy- BoT

BANK of Tanzania (BoT) has said declined prices of oil globally and locally will significantly reduce adverse impact of

Covid-19 on domestic economy.

The central bank said the prices fall set to reduce pressure on exchange rate and cost of production thus pushing up productivity and growth.

"The decline in prices significantly reduced adverse impact of Covid-19 on the domestic economy, by reducing pressure on exchange rate and cost of production," BoT said in the latest Monthly Economic Review (MER) issued yesterday.

World Bank said Tanzania's external position will benefit from higher gold prices and lower oil prices.

"The external position is highly vulnerable to volatility in gold and oil prices," World Bank said in its Tanzania Economic Update-Addressing The Impact of Covid-19, with a Special Section on the Role of ICT.

Last year the country's oil bill accounted for 20 per cent of total imports and gold for about 20 per cent of total exports.

Recent price developments for these commodities have been favorable. In the twelve months ending with March 2020, the value of gold exports rose by 22 percent as prices bounced back from a low of US$1,301 an ounce in March 2019 to US$1,592-a level not seen since March 2013.

The fuel prices reflecting subdued global demand following the outbreak of Covid-19 pandemic, prices of oil in the world market continued to fall, averaging 23.3 US dollars per barrel in April, which was lower than 63.7 US dollars per barrel in January.

In April, domestic pump prices of petrol, diesel and kerosene fell by 4.7 per cent, 5.9 per cent and 4.1 per cent from March to 2,191/- per litre 2,115/- per litre and 2,167/- per litre, respectively.

"The rate of change in pump prices was lower compared with world market prices because domestic fuel prices are usually adjusted to world market prices with lag of two months," MER said.

The domestic pump prices of petrol, diesel and kerosene also were lower than prices recorded last April by 1.7 per cent, 6.5 per cent and 2.3 per cent, respectively.