Tanzania’s forex reserves hit $5 billion in November 2023

Tanzania’s foreign exchange reserves remained adequate at about USD 5 billion in November 2023, sufficient to cover more than 4 months of imports according to the Monetary Policy Committee (MPC) meeting statement released by the Bank of Tanzania.

The Central Bank statement however noted that the exchange rate depreciated by around 7.8 percent, year-on-year, reflecting the shortage of foreign currency liquidity.

“The foreign reserves are projected to remain adequate,” the statement said.

The MPC met on 18th December 2023, to review the conduct of monetary policy and performance of the economy. During deliberations, the MPC observed that the less accommodative monetary policy continued to keep monetary and financial conditions at the level required to contain inflation below the target of 5 percent while continue to support economic activities and financial sector stability.

Supported by fiscal policy and an improvement in proceeds from exports and tourism, the policy stance lessened the pressure on demand for foreign currency in October and November 2023.

The MPC also discussed the global economic outlook and noted that the situation has been relatively weak for most of 2023, largely due to geo-political tensions, tightened financial conditions, and high energy prices.

“The condition might improve in 2024, conditional on the fading of geo-political conflicts, decline in energy prices in the world market, and easing of monetary policy tightening in advanced economies. Furthermore, after much deliberation about the domestic economy,” the MPC observed.

It added that despite the spillover effects of the global shocks, the performance of the economy was satisfactory in 2023 and is expected to further improve in the subsequent year, on account of the implementation of growth-enhancing policies and increased private sector investment.

The MPC noted that owing to the implementation of a less accommodative monetary policy, the growth of monetary aggregates slowed in November 2023.

Meanwhile, extended broad money supply grew at13.7 percent compared with 14.5 percent recorded in September 2023, driven by private sector credit growth, which slowed to 18.3 percent from 19.5 percent.

“The growth of private sector credit, was still above the projection of 16.4 percent by the end of December 2023. The high investment appetite strengthened by improving the business environment and supportive policies is expected to persist,” the statement added.