Tanzania: Current Account Deficit Improves Due to Exports Rise

The Tanzania current account improved to a deficit of 671.1million US dollars in the year ending September, which is more than a half of the deficit of 1,839.5 million US dollars registered in the corresponding period last year.

According to the Bank of Tanzania (BoT) monthly economic review for October, the improvement of the current account deficit was on account of increase in export of goods and a decrease in imports.

During the reference period, the overall balance of payments recorded a deficit of 439.0 million US dollars compared with a deficit of 34.5 million US dollars on account of a relatively low official flows.

The central bank report shows that Tanzania external sector of the economy continued to regain momentum after global impact of Covid-19 pandemic, as trading partners progressively reopen their economies from lockdown.

The export of goods and services amounted to 9,467.9 million US dollars in the year ending September, compared with 9,515.0 million US dollars in the year ending September last year on account of a decline in services receipts.

On month-to-month, the exports of goods and services declined to 717.7 million US dollars in September from 948.3 million US dollars in the preceding month.

Traditional exports almost doubled to 914.8 million US dollars in the year ending September from 567.5 million US dollars in the corresponding period last year.

The increase in exports was manifested in cashew nuts, cotton, cloves, sisal and tobacco.

Sisal export rose on account of both volume and prices effects, while cashew nuts, cotton, cloves and tobacco rose in export volume, attributable to increase in production. The export of coffee and tea declined on account of low export volume.

On month-to-month, traditional goods exports rose to 41.9 million US dollars in September this year from 23.1 million US dollars in the preceding month, contributed mostly by coffee, cotton and tobacco.

The export of non-traditional goods improved to 4,997.2 million US dollars in the year ending September from 3,926.9 million US dollars in the corresponding period last year, mainly on account of increase in export of gold and manufactured goods.

The export of gold rose by 45.8 percent to 2,826.1 million US dollars, due to increase in both volume and price in the world market, and accounted for 56.6 percent of non-traditional exports.

In September this year, the value of export of gold amounted to 263.1 million US dollars compared with 171.6 million in the corresponding month last year as a result of weakening of financial asset prices.

Service receipts amounted to 3,247.3 million US dollars in the year ending September, lower compared to 4,930.9 million US dollars in the corresponding period last year.

Travel receipts, which mostly comprise receipts from tourism, declined by 39.1 percent to 1,726.6 million US dollars and accounted for more than 60 percent of services receipts from 61.8 percent.

The drop in travel receipts was attributable to measures by countries taken to limit the spread of Covid-19, which included lockdown and suspension of international passenger flights.