Current account deficit widens as imports rise

  The current account deficit worsened by 3.6 per cent in the year to May, as imports of goods and services superseded increased exports of goods and services, the Bank of Tanzania (BoT) has said. The deficit worsened to $2.6 billion in the year to May 2011 compared to $2.53 billion in the preceding year, according to the BoT’s Monthly Economic Review for June 2011. “The current account deficit widened by 3.6 per cent to $2,607.4 million when compared with the level that was recorded in the year ending May 2010 mainly on account of rise in import of goods and services that outweighed the increase in exports of goods and services and official current transfers,” the BoT says. Imports of goods and services rose by 18.7 per cent to $9.71 billion in the period from $8.19 billion to outweigh a 27.7 per cent increase in export of goods and services. The country’s goods and services exports reached $6.447billion, an increase of $1.399billion from the level attained during the year to May 2010. BoT attributes the increase in the import bill to increased imports of petroleum products, fueled by persistently increasing global oil prices as well as increased imports of farm inputs that are meant to support the coutry’s new agriculture blue print, Kilimo Kwanza. In the year ending May 2011, a total of 313,400 tons of fertiliser were imported compared with 235,000 tons imported in the similar period a year earlier. In the same manner, imports of capital goods went up by 19.2 per cent to $3.008billion. On the other hand, the BoT attribute an increase in exports of goods and services by improved exports of gold, manufactured goods, coffee, tobacco, cashew nut as well as receipts from travel and transportation services. Tanzania earned $701.6 million from traditional exports. This was 54.3 per cent higher than the value recorded in the year ending May 2010, thanks to significant increases in both volumes and unit prices of coffee, tobacco and cashew nuts.   Source – The Citizen

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