The central bank of Tanzania (BoT) releases the April 2021 monthly economic review and it depicted the economy to fair rather moderately amid the waves of COVID-19 recovery globally.
At the moment, Tanzania economy is projected to grow by 5.7 per cent this year, propelled by public investment and normalization of global trade and investment, according to BoT.
According to the report, inflation remained low and within the benchmarks set forth at both the national regional levels.
“Year-on-year headline inflation eased to 3.2 per cent in March 2021 from 3.3 per cent in the preceding month and 3.4 per cent in the corresponding period in 2020, driven mainly by the slowdown in prices of rentals paid by tenants, gas, charcoal, firewood, and transportation cost,” the central bank report said.
Further on the line, on a month-to-month basis, headline inflation stabilized at 0.9 per cent in March 2021 as in the preceding month and compared to 0.1 per cent in the corresponding period in 2020.
The core inflation angle, whose index accounts for the largest share in the consumer price index, stood at 3.6 per cent in March 2021, as in the preceding month.
On energy, fuel and utilities inflation continued to decrease to fall, standing at 1.1 per cent in March 2021 from 2.9 per cent recorded in the corresponding period in 2020 contributed by a decrease in prices of oil linked to the impact of the COVID-19 pandemic.
“Twelve-month inflation for food and non-alcoholic beverages rose to 4.3 per cent in March 2021 from 3.6 per cent recorded in the preceding month, mainly attributed to a rise in prices of food items which most of them were off-season,” the report noted.
On fuel prices, domestic pump prices of petroleum products have been rather moderate since June 2020, which reflects on the movements in the world market prices “attributable to the recovery of economic activities in many countries, improving global growth prospects and supply stickiness.” According to the report.
READ:What bank of Tanzania report says about the economy?
Money and Credit
In this section of the economy, the central bank managed to sustain the implementation of monetary policy easing measures in support of the recovery of the economy via private sector credit growth.
“Consequently, extended broad money supply (M3) rose to $13 billion in March 2021, up from $12.1 billion in the corresponding period in 2020. The increase is equivalent to annual growth of 6.8 per cent in March 2021 compared with 9.9 per cent in March 2020, while broad money supply (M2) grew by 9.3 per cent compared with 10.8 per cent,” the report noted.
However, the report argued that credit extension was executed to the private sector in the country comprises loans extended by banks and microfinance institutions.
The report pointed that in March 2021, credit extension to the private sector by banks ascended by $ 200 million to $8.6 billion equivalent to annual growth of 2.3 per cent compared with 8.6 per cent in March 2020.
“The subdued growth rate of credit to the private sector is mainly attributable to the adverse effects of COVID-19 on some businesses, particularly those directly exposed to external shocks. These comprise exports, such as tourism and traditional cash crops. Credit extended by banks to the central government through the purchase of government securities increased by 8.7 per cent, within the borrowing limit of one per cent of GDP outlined in the Government budget for 2020/21,” the report argued.
As a country consuming a healthy amount of loans from international funding organs, Tanzania’s debt status has rather remained an itch to the economy.
According to the report, the stock of external debt, comprising the public and private sector, amounted to $ 24.4 billion at the end of March 2021.
“The external debt stock increased by $2 billion from the corresponding month in 2020. The debt level decreased by $ 306.6 million from the level in the preceding month, mainly on account of debt services which outweighed new disbursements and appreciation of the US dollar against other currencies in which the debt is denominated,” BoT report noted.
In April, disbursement amounted to $20.1 million, all of which were received by the government of Tanzania aimed for development projects. However, debt services payments stood at $94.9 million, “out of which $76.3 million were principal repayments and the balance were interest payments,”
BoT monthly review argued that the profile of external debt by borrower category remained unchanged, whereby the debt owed by the central government accounting for 77.5 per cent, and the balance by the private sector and public corporations.
On domestic debt, the numbers were a bit higher. According to the review, the stock of domestic debt rose to $6.8 billion in March 2021, following an increase of $106 million and $560 million from the preceding month and the corresponding month in 2020, respectively.
“The increase in debt during the month was mainly on account of utilization of statutory overdraft facility, which was below the limit for 2020/21. The composition of debt in terms of maturity profile continued to be dominated by longer-term debt instruments in form of Treasury bonds and stocks, accounting for 89.1 per cent,” central bank review argued.
As the external sector gains momentum, the report showed that the value of exports of goods and services amounted to $8.4 billion during the year ending March 2021, lower than $9.6 billion registered in the corresponding period in 2020, argued by a decrease in services receipts.
“In March 2021, however, the value of exports of goods and services was $718.8 million, higher than $617.5 million, the amount recorded in March 2020,” the report said.
The report analyzed the performance of the export during the year March 2021 noting that, “the value of goods exports amounted to $ 6.29 billion, an increase of 13.5 per cent compared to the amount recorded in the corresponding month in 2020, owing to satisfactory performance in non-traditional exports. The value of non-traditional exports increased to $5.41 billion in the year ending March 2021 from $4.18 billion registered in the corresponding period in 2020, driven by an increase in export of gold, manufactured goods and horticultural products,”
Further, Tanzania’s efforts to support the mining industry helped the exports sector during the period as gold exports, which accounted for 55.9 per cent of non-traditional exports, increased by $701.3 million to $3.02 billion.
In this sector of the economy, the report noted that, during the year ending March 2021, the import bill for goods and services decreased to $9.02 billion from $10.6 billion registered in the corresponding period of 2020 owning to a decline in import values to capital and intermediate goods.
“The value of goods imports declined to $ 7.85 billion during the year ending March 2021 compared to $8.92 billion in the corresponding period in 2020,” the central bank review argued.
The sector recorded significant downplay in transport equipment and oil, whereby the value of oil import declined by 31.4 per cent to $1.23 billion.