Negative balance of payments widens, new BoT report shows

What you need to know:

  • The increased imports of goods and services, mainly those related to infrastructure project has widened the country’s current account, which has overturned the Balance of Payment (BoP) into a deficit for two consecutive months, from a surplus in July.

Dar es Salaam. Increased capital goods imports, mainly related to infrastructure projects and the rise of oil prices in the global market, have continued to widen the balance of payments deficit. The Bank of Tanzania (BoT) monthly economic review for October has shown that the balance of payments deficit widened by $93 million to $276 million during the year ending September from the deficit of $183 million recorded during the year ending August 2018.

This is the second consecutive month the economy is recording a balance of payments deficit, as during the year ending July, a surplus of $343.4 million was recorded, while the surplus for the year ending June was $1,352.8 million.

The growing BoP deficit was also partly on account of widening of the current account deficit.

The current account deficit nearly doubled to $2,159.0 million in the year ending September 2018 from $1,192.5 million in the year ending September 2017, largely accounted by increase in imports, particularly transport equipment and building and construction.

The central bank reports have shown that current account deficit increased by $371 million (nearly Sh850 billion) during the three months from July and September.

The BoT report has said the growing BoP deficit was a result of aggressive imports of capital goods for infrastructure projects including Standard Gauge Railway (SGR), roads and bridges, ports, airports as well as an increase of world market’s fuel price.

Oil import, which accounts for the largest share of imports of goods, increased by 8.1 per cent to $1,972.9 million largely consistent with the rise in oil prices in the world market caused by supply factors.

This is being experienced when the country also recorded a drop of exports of goods and services as the report shows they fell to $8,669.1 million during the year ending September this year, compared with $8,741.3 million recorded in the year ending September 2017 mainly due to decline in export of non-traditional goods.