Bank of Tanzania (BoT) monthly (November 2019) economic report has analyzed the economic development of Zanzibar, a semi-autonomous region of Tanzania, (an archipelago in the Indian oceans composed of several islands), highlighting various keys issues and developments particularly in managing inflation.
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Inflation
The report indicated that the headline inflation remained below the medium target of 5 per cent, same as the previous month of October, while Annual headline inflation was 2.4 percent in October 2019 compared with 3.7 percent recorded in October 2018 largely due to easing in non-food inflation.
On the same mark, the report indicated that twelve-month non-food inflation eased to 2.7 percent in October 2019 from 4.5 percent in the corresponding month of 2018 mainly due to a decline in prices of kerosene, diesel and petrol, while in October the inflation was moderated by prices of fish, rice, and bananas.
Budget operations
Zanzibar government managed to amount over $ 29 million in domestic revenue and over $ 866,000 was foreign grants. In the past month,the island amounted to over $ 31 million in domestic revenue.
In addition, the report noted that domestic revenue collections were 83.5 percent of the target for the month, while foreign grants surpassed projections for the month by 18.1 percent. Out of domestic revenue, about $ 26 million was tax revenue, which was below the monthly target by 16.4 percent, and the balance was non-tax revenue.
On a comparison basis, the past month revenue collections were 85.5 percent of the target for the month and higher than the amount collected in September 2018 by 12.9 percent.
However, the government expenditure amounted to over $ 41 million of which $ 27 was recurrent expenditure (payments made by the government) and over $ 14 million was spent on development projects.
“Local funding of development projects accounted for 67.5 percent and the balance was foreign funding. The overall fiscal deficit amounted to over $ 3 million in October 2019, which continued to be financed by foreign loans” the report notes.
Exports
The export sector sustained a rather modest fall less than the previous month of 12.7 per cent. According to the report cloves—which is one of the significant and main cash-crop in Zanzibar- have not been performing better.
“During the year ending October 2019, the value of goods and services export decreased by 7.5 percent from the amount registered in the similar period in 2018 on account of a decline in the value of goods export. The weak performance of goods exports was mostly driven by cloves exports; whose value fell by 94.0 percent to $ 2.3 million in the year ending October 2019” the report argues.
The report also argues that the latter was largely on account of a decline in the volume of cloves exported, which is associated with the cyclical nature of the crop. Likewise, the value of seaweeds exports declined to $4.1 million from $ 4.7 million during the year ending October 2018. Conversely, the value of fish and fish products exports almost doubled on account of increased demand for fish, particularly anchovies, in the Great Lakes region.
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Imports
On the other hand, the report highlighted that the import sector, which comprises of goods and services imports, sustained an increase by 16.2 per cent equivalent to $ 329.5 million in the year ending October 2019 from the amount recorded in the year ending October 2018.
The report also argued that this was due to the increase in payments for services and the value of intermediate and consumer goods imports.
In addition, the report showed that earnings from services grew by 13.9 percent to $ 195.9 million in the year ending October 2019, mainly owing to an increase in receipts from travel-related services including tourism—which is one of the most foreign currencies attracting sector in Zanzibar.
