Tanzania has informed the International
Monetary Fund (IMF) of its intention to draw 114.2 million US dollars
to cushion against the poor export and uncertainty in the global
economy.
IMF said the precautionary SCF Arrangement
was “designed to provide Tanzania with a financial cushion to withstand
deterioration in external demand and access to global market financing.”
Last July when the 18-month facility was
approved, IMF said the country was not facing any immediate balance of
payment needs.
The economy was projected to grow between 6.5 and seven
per cent. “As Tanzania strengthens its macroeconomic buffers, it remains
vulnerable to a renewed global downturn.
“Its fiscal deficit, public
debt and inflation levels are higher than at the time of the 2008–09
global recession, while gross reserve cover is low,” IMF said then.
IMF said it “considers the decision to
be an integral part of their (Tanzania) response to heightened external
sector vulnerabilities. “(Also) emerging balances of payments pressures
and expect this step to boost market confidence.”
Bank of Tanzania (BoT)
Monthly Economic Review for January shows that at the end of last
December, the current account deficit stood at 3,438.0 million US
dollars compared to 3,977.1 million US dollars recorded in 2011.
“The performance was largely driven by
an increase in exports volumes for most of the traditional cash crops…”
BoT said in its economic review.
BoT said the overall balance of
payments recorded a surplus of 327.3 million US dollars compared with a
deficit of 202.0 million US dollars recorded in 2011.
This, the central bank said, “reflects a
continued net increase in inflows in the form of capital grants,
foreign direct investments and foreign borrowing.”
Also BoT said in its
Monetary Policy Statement (MPS) issued this month that the current
account deficit was narrowed down, thanks to improved industrial
production associated with stability in power supply, and increase in
international tourist arrivals.
Nevertheless, at the end of last
December, gross official reserves stood at 4.1 billion US dollars
sufficient to cover about four months of imports of goods and services.
However a recent study shows that Dar es Salaam was most exposed to
Eurozone crisis and slower growth in China than among East African
states.
The report titled, ‘Shock Watch
Bulletin: Monitoring the impact of the Eurozone crisis, China/India
Slowdown, and energy price shocks on lower-income countries,’ was
published by the London-based Overseas Development Institute.
The risks
associated with exports of precious metals like gold and diamond to
European markets and high revenues from tourism are a big contributor to
Tanzania’s economy but could harm its growth prospects at a time of
economic decline in Europe.
Source: The Daily News, www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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