State mulls reducing oil bill

The government is to reduce significantly the oil bill in the 2012/2013 budget as one of the measures to cut on imports relative to exports.

The Minister for Finance and Economic Affairs, Dr William Mgimwa told the Daily News in Dar es Salaam on Monday the move seeks to improve the deteriorating   overall balance of payments, a major cause of economic hardship generally.

He said the government will look for alternatives to heavy reliance on fuel consumption and reduce significantly bulk transportation of the vital commodity by road that shoots prices up and burdens consumers.

The minister was giving highlights of the budget estimates to be tabled in Parliament on Thursday amid concerns of unbearably high cost of living. The government will spend Sh 15.045tr/= in 2012/13, up from the almost Sh 13.0tr/- of the last fiscal spending, the Minister earlier told the Parliamentary Standing committee on Finance.

“The nation has to cut spending on oil and generally learn how to save energy”, he said. He also revealed that the government will launch a countrywide campaign to sensitize the people on energy saving behaviour. “Sometimes people put on lights during the day when it’s not necessary”, he said.

The minister’s position comes a few days after the Bank of Tanzania (BoT) Monthly Economic Review for May showed that during the year ended last April, the current account deficit more than doubled to  5,461.7 million US dollars  compared to $2,498.6 million dollars in the previous year.

The central bank’s report noted that was partly due to the increase in imports of goods, particularly oil. The report further stated the widening gap in the current account had partly translated into a deterioration of the overall balance of payments deficit to 163.1 million dollars compared with the surplus of 45.9 million dollars in the year ended April 2011.

At the end of April 2012, gross official reserves stood at 3,498.5 million dollars, enough to cover about 3.7 months of the projected import of goods and services. During the same period, gross foreign assets of banks were 1,018.1 million dollars.

It also indicated that the value of imported goods and services was 12,825.7 million dollars, an increase of 36.4 percent compared to the level recorded in the corresponding period in 2011. It attributed the increase largely by a surge in the value of oil imports following a rise in the world market prices coupled with an increase in the domestic demand for thermal power generation.
Source: The Daily News,http://www.dailynews.co.tz,reported by Orton Kiishweko  


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