Shortage of foreign currency in Tanzania easing, says Report

Dar es Salaam. Tanzania’s foreign currency situation is gradually improving, the powerful Monetary Policy Committee (MPC), said yesterday, attributing the trend to a rise in earnings from tourism, minerals, manufacturing, and cash crops.

In a statement released after its 228th meeting that was held on October 27, 2023, the MPC said with improvements in earnings foreign exchange reserves remained above $5 billion in July–October 2023, which was enough to cover for between four and 4.5 months of the country’s import requirements.

“The MPC also noted that, the recent observed shortage of foreign currency is gradually improving owing to earnings from tourism, minerals, manufacturing, and cash crops,” reads the statement that has been signed by the MPC chairman who doubles as the BoT Governor, Mr Emanuel Tutuba.

The statement said the BoT was also participating in the interbank foreign exchange market by selling foreign exchange to address accumulation of foreign currency denominated loans extended to importers. This, he said has also contributed to the improvement.

During recent months, there have been complaints from members of the private sector, with the oil marketers saying forex shortage was the reason behind some reported fuel shortages in some remote areas.

The Tanzania Association of Oil Marketing Companies (Taomac) said in August that the dollar shortage compelled importers to cut fuel imports. As such, small scale traders found themselves in the wood.

The associations said imports of petrol and diesel decreased by 24.2 percent between January and August this year compared to a similar period last year.

The imports dwindled to 1.43 million metric tonnes, below compared to 1.89 million metric tonnes.

Meanwhile, the MPC said in its statement that the implementation of a less accommodative monetary policy successfully maintained liquidity in the economy at appropriate levels in August, September and October 2023.

Mr Tutuba said the foreign currency condition is expected to continue improving in the wake of foreign exchange inflows from tourism, export crops, and minerals, as well as measures taken by the Bank and the government to address the situation.

He said that combined with supportive fiscal and structural policies, has contained inflationary pressures, facilitated economic activities, and preserved the financial sector’s stability amidst challenges in the global economic environment. The policy stance has also helped to reduce foreign currency demand pressure.