Tanzania’s forex reserves diminish by$439.3 million

According to a report by the Bank of Tanzania (BoT) gross official reserves fell from $5.484 billion as of June 2018 to $5.044 billion by the end of the year. The fall was attributed primarily to the servicing of foreign debts, as well as investment in big infrastructure projects. The reserves still sit above the benchmark recommended by the East African Community, that advises forex reserves should be sufficient to provide import cover for a period of at least 4 months. 

The current account deficit also increased during 2018. A fall in the export value of traditional crops such as tea, cashews nuts and cloves, as well as a rise in imports such as capital goods, led to an increase from $1.6 billion at the end of 2017 to $2.7 billion at the end of 2018.

Speaking on the trend Prof Semboja Haji, State University of Zanzibar, stated “Widening of the current account deficit has been fuelled by President’s investment in infrastructure which requires more importation of capital goods. This, in the long run, would be an asset to the country.”

While the increase in the value of imports was driven by the demands of major infrastructure works, the value of food imports declined significantly following a productive 2017/18 farming season.