Tanzania’s current account deficit more than doubles YoY

Tanzania’s current account deficit doubled in the year ending May 2022, driven by increases in prices of oil, transport and iron sheets. 

Imports of goods and services rose by $4.2 billion to $13.8 billion. The Bank of Tanzania’s Monthly Economic Review shows the deficit reached $3.7 billion, up from $1.7 billion in May 2021. The central bank attributes this to “higher imports relative to exports” as a result of high commodity prices in the agriculture-based economy. 

Tanzania’s main imports are transport equipment, machinery, construction materials, oil, fertilisers, industrial raw materials and consumer goods. Its top exports are gold, nuts, copper, and precious metal ores and concentrates. 

Due to loans and grants, the balance of payments recorded a surplus of $242.5 million. Foreign reserves stood at $5.2 billion at end of May 2022 and covered 4.7 months of projected imports of goods and services. 

“Upward risk on food and energy inflation persists” due to increased demand for food from some neighbouring countries and the ongoing Russia-Ukraine war, the central bank wrote in its quarterly economic report. Inflation reached 4.4% in June, within the 3–5% target range.

GDP grew 4.8% in 2021. Tanzania has been one of Africa’s fastest-growing economies since 2000, but in 2018, over 49% of the population still lived on less than $1.90 per day, according to the World Bank.

The IMF extended a medium-term loan of $1.1 billion under the Extended Credit Facility in June.