Dar registers surplus BoP, but subtle

The overall balance of payments (BoP) registered a huge surplus in the last 12 months ending March, thanks to grants, foreign direct investments and foreign borrowing.

Experts say although the achievement is a good step for the nation that seldom registers BoP surplus, more needs to be done to cut import-export deficit, before starting celebrating.

The Bank of Tanzania’s (BoT) monthly economic review for March shows that the overall BoP registered the surplus of 784.7 million US dollars at the end of March compared to a deficit of 161.1 million US dollars recorded in March 2012.

BoT attributes the surplus partly to reduction in the current account deficit, with the main contributors being net inflows in the form of capital grants, foreign direct investment and foreign borrowings.

As a result, the central bank says in its monthly economic review of March this year that the gross foreign reserves amounting to 4.40 billion US dollars were sufficient to cover 4.3 months of projected import of goods and services excluding FDIs related imports.

The gross foreign assets of banks stood at 972.0 million US dollars. But, the economists interviewed said the surplus registered was good though more emphasis should be directed to increase exports to curb the deficit on the current account as imports still outweigh exports.

Confederation of Tanzania Industries (CTI) Director of Policy and Planning Hussein Kamote told the ‘Daily News’ that the current surplus shows that the country confidence oversees “is good.”

“The good sustainable BoP surplus should be measured from current account, but the overall (especially not from current account) is not a good yard stick,” Mr Kamote said yesterday.

The value of export of goods and services amounted to 8.406 billion US dollars during the year ending March compared to 7.56 billion recorded during the year ending March 2012. 

While total imports in the same year climbed marginally by 1.8 per cent to 10.51 billion US dollars, during the previous year that ended in March 2012, imports increased by 35.7 per cent to 10.4 billion US dollars.

“The slowdown (on imports) was observed in machinery, fertilizers and oil,” BoT says in its March report. Mr Kamote said the surplus from overall BoP paints a bias picture, disfavoring current account that measures the country’s total imports and exports.

Tanzania Securities Business Analyst Brenda Rose Massay said in a daily market report that the shilling in the last five months has slid by 1.49 per cent to close the yester-interbank exchange market at 1,635/- against the US dollar.

The international Monetary Fund (IMF) said early this month that it would be appropriate for the BoT to complement the reserve money targeting framework with a more flexible approach to policymaking that gives a greater role to the policy interest rate.

“Greater exchange rate flexibility could play a useful role in the event of renewed pressures on the exchange rate,” IMF said after completing its sixth and final review under the policy Support Instrument for Tanzania.
Source: The Daily News, reported from Dar es Salaam
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