BoT Monthly Economic Review: JULY 2009

Tanzania's current account deficit widened 10 percent to $2.55 billion in the year to June due to increased buying of capital and consumer goods, the central bank said on Friday.

Imports of goods and services jumped 6 percent to $7.6 billion in the period, the Bank of Tanzania (BOT) said in its latest monthly economic review.

"The value of goods imports rose ... following the increase in importation of capital and consumer goods," the bank said.

Tanzania’s goods and services exports rose by 5.2 percent to $4.45 billion compared with the year ended June 2008, due to increased sales of manufactured goods.

Gold exports fell 18 percent to $809.3 million, from the sale of 27.9 tonnes, compared with 35.1 tonnes worth $983.5 million a year before. However, the drop in gold sales was cushioned by higher world prices, the bank said.

Gold made up 32 percent of exports, while manufactured goods made up 25 percent, the bank said.

Tourism – (Travel) -- fetched $1.25 billion, up from $1.23 billion a year before. The industry is Tanzania's leading source of foreign exchange. The BOT sees a drop of up to 20 percent in the sector in 2009 due to the global slump.

Traditional exports -- tea, coffee, cashew nuts and tobacco, among others -- earned $488 million, up 45 percent over the previous year, while horticulture fetched $36.5 million, a 55 percent rise from the year before.

Tanzania's economy is largely driven by mining, farming and tourism. But sectors such as manufacturing, telecommunications and financial services have been growing in recent years and contributing more.

BOT said credit to the private sector from banks rose by 33 percent to 4.71 trillion shillings.

The bank said in the year ending June, the country's official foreign exchange reserves stood at $2.92 billion -- or 4.6 months of import cover -- from $2.66 billion a year before.

"The Bank's gross international reserves went up ... following receipt of funds from IMF under the Exogenous Shock Facility," BOT said.

The International Monetary Fund approved a $336 million 12-month loan to Tanzania in late May to help it cope with the global economic crisis and disbursed $244 million by end-June.

BOT's monetary policy aims for the country to have no less than five months of import cover in 2009/10.