Tanzania’s current account deficit almost doubled to $4.41 billion from July 2022 to April 2023, compared with the corresponding period in 2021/22 according to the Bank of Tanzania (BoT) Monetary Policy Committee statement for June, 2023.
According to the Central Bank, this development heightened the demand for foreign exchange.
The Bank intervened in the interbank foreign exchange market to support the balance of payments needs.
Foreign exchange reserves declined to $4.88 billion at the end of April 2023 from $5.46 billion at the end of April 2022.
“Despite the decline, the reserves remained adequate within the country benchmark of at least 4 months of imports. The exchange rate depreciated, albeit moderately,” the MPC statement said.
According to the BoT, global shocks heavily affected the external sector of the economy following an increase in commodity prices.
Revenue performance was also affected by the global shocks, but was generally in line with projections from July 2022 to April 2023.
Revenue collection was 94 percent of the target, of which tax collections reached 96.7 percent of the target, due to enhanced tax administration and improved compliance.
Foreign concessional borrowing and grants surpassed the projection by nine percent, much of it disbursed to projects, while external commercial loans were 70.8 percent of the projection.
Expenditure was aligned with available resources, with recurrent expenditure accounting for 94.9 percent of the estimates.
Economic Performance in Mainland Tanzania
The economy experienced adverse spillover effects of the global shocks, and delays of short rains in the first half of 2022/23.
“However, due to the diversified structure of the economy and policy measures adopted, economic performance was satisfactory,” according to the MPC statement
Real GDP growth was 4.7 percent in 2022 as projected, mostly driven by public and private investment and consumption expenditure.
The increase in private investment is associated with an improved business environment, as reflected by high private sector credit growth and an increase in private sector external debt. Sectors that contributed most to the growth of the economy were agriculture, construction and mining.