Tanzania’s foreign currency condition is expected to continue improving in the wake of foreign exchange inflows from tourism, export crops and minerals as well as measures taken by the Bank of Tanzania (BoT) and the Government to address the situation.
According to the Monetary Policy Committee (MPC) statement released by the Central Bank this week, foreign exchange reserves remained above $5 billion in July-October 2023, with import cover within the country’s and EAC benchmarks of at least 4 and 4.5 months, respectively.
The MPC also noted that, the recent observed shortage of foreign currency is gradually improving owing to earnings from tourism, minerals, manufacturing, and cash crops.
“The Bank of Tanzania participation in the interbank foreign exchange market by selling foreign exchange to address accumulation of foreign currency denominated loans extended to importers have also contributed to the improvement,” the statement said.
Meanwhile, Tanzania’s current account deficit narrowed but remained high due to the increase in commodity prices in the world market.
The current account deficit narrowed to $3.65 billion year-on-year in September 2023 from $4.72 billion in September 2022.
“The improvement was mainly driven by a rise in earnings from tourism. The current account position is expected to gradually improve, driven by earnings from tourism, gold, and traditional export crops,” the statement added.
As for Zanzibar, the current account deficit widened to $417.1 million in September 2023, from a deficit of $344.8 million, mainly on account of an increase in imports of goods and services.
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