Latest BoT report upbeat on economic prospects

Tuesday August 11 2020

 

By Alawi Masare @AMasare malawi@tz tionmedia.com

Dar es Salaam. Some  Tanzania’s macroeconomic indicators show a positive outlook despite the impact of Covid-19 pandemic,  which has threatened to send countries into recession this year.
From exports, foreign exchange reserves to interest rates, the indicators show improved trend, according to the Bank of Tanzania’s (BoT) monthly economic review for the year ending June 30, 2020.
Tanzania’s current account improved to a deficit of $381.9 million from a deficit of $2.03 billion in the similar period previously, reflecting an increased export of goods and services.

Exports
The value of exports of goods and services increased to $9.77 billion in the year ending June 2020 compared with $8.72 billion in the year ending June 2019, mainly driven by an increase in export of gold and cashew nuts, coupled with a decrease in imports due to subdued demand because of the challenges related to Covid-19.
According to the report, export of gold increased by 48.5 percent to $2.59 billion in the year ending June 2020 compared with $1.74 billion previously.
However, the report did not show the cashew nut exports during the period despite noting that the cash crop had significant contribution.

Reserves
Foreign exchange reserves stood at $5.18 billion at the end of June 2020, an increase from $4.40 billion at the end of June 2019.
“The reserves were sufficient to cover six months of projected imports of goods and services,” according to the central bank.
“The import cover is above the country’s benchmark of not less than four months,” it added.


Interest rates
According to the report, interest rates charged by banks on loans and those offered on deposits showed a general declining trend in June 2020, reflecting the impact of sustained accommodative monetary policy measures.
The overall lending rates are reported to decrease to an average of 16.51 percent from 16.87 percent in June 2019, while the overall deposit rate decreased by 70 basis points to 6.74 percent from the rate registered in June 2019.

Financial markets
The report also indicates that the domestic financial markets remained with adequate levels of liquidity in line with accommodative monetary policy pursued by the bank. This was reflected in the primary market of government securities that was characterised with strong demand and low, and stable money market interest rates.

Credit to the economy
Financing of economic activities in the private sector slowed in the last financial year as the Covid-19 pandemic affected demand for new loans but the growth was still positive.
According to the report, the bank’s credit to the private sector grew by 5.5 percent compared to 7.6 percent in the corresponding month in 2019.

National debt
BoT said the external debt stock was low risk of debt distress even as it increased by $601.1 million on annual basis. The debt amounted to $22.52 billion at the end of June 2020.
As in the past, the central government external debt was the largest share of total external debt, amounting to $17.41 billion, or 77.3 percent followed by private sector debt at 22.4 percent.

Revenue
The central bank said the tax revenue increased by 23.8 percent to Sh1.8 trillion in June 2020, from the amount recorded in June 2019 attributing the performance with strengthened tax administration efforts and enhanced compliance.
However, the central bank did not indicate the 12-month figures as it did the comparison in other segments, considering that June 30 was the end of the last financial year.