Tanzania’s forex reserves drops to $5.01 billion in March 2023

The stock of Tanzania’s foreign reserves declined to $5.012 billion at the end of March 2023, from $5.581 billion recorded in the similar last year according to the Bank of Tanzania Monthly Economic Review for April 2023 released recently.

According to the Central Bank, despite the decline, the reserves remained adequate, covering 4.5 months of projected imports of goods and services, in line with the country and the EAC benchmarks of at least 4 and 4.5 months, respectively.

BoT in the report noted that the external sector of the economy during March this year remained prone to cumulative effects of the previous shocks, namely, the war in Ukraine and effects of COVID-19 pandemic, which significantly impacted the global commodity prices.

“Reflecting these challenges, the current account deficit widened significantly owing to a high imports bill,” the report says.

The balance of payments also recorded a deficit of $874.2 million, compared to a surplus of $990 million in the year to March 2022.

BoT’s Senior Economist Dr. Ulrick Mumburi told reports in Zanzibar last month that despite the global economic turbulence, Tanzania has sufficient foreign reserves to keep the country economically stable.

“We have a fair share of foreign-currency reserves including US dollars. It is above the reserve margin by about 4.8 per cent,” Dr Mumburi said.

He dismissed claims that the country faces shortage of foreign exchange, particularly the US dollars.

Meanwhile, the shilling during March 2023 remained stable against currencies of major trading partners consistent with moderate inflation rate and adequate reserves, trading at an average rate of 2,322.16/- per US dollar, compared with 2,321.13/- per US dollar in the preceding month available data from BoT shows.

“On annual basis, the shilling depreciated by 0.5 percent from 2,309.90/- per US dollar in March 2022,” BoT data shows.