Remarkable economic revival: BoT report reveals surging foreign reserves in June 2023

Remarkable economic revival: BoT report reveals surging foreign reserves in June 2023

In June 2023, Tanzania’s balance of trade saw a shortfall of $4.86 billion, a notable contrast from the $3.398 billion deficit registered in the corresponding period of June 2022.

The driving factor behind this discrepancy, as outlined in the Bank of Tanzania’s (BoT) Monthly Economic Review for June 2023, lies primarily in escalated import expenditures.

BoT anticipates that the forthcoming months will witness an amelioration in the current account equilibrium. This optimistic outlook hinges on the twin factors of receding strain exerted by commodity costs and the augmentation of revenues sourced from tourism-related enterprises.

Citing the cumulative repercussions of external factors, most notably the Ukrainian conflict and the tightening of monetary policy in advanced economies, the Central Bank underscores how these elements have collectively weighed on the nation’s international economic affairs.

In a positive turn of events, Tanzania’s overall balance of payments underwent an encouraging transformation, transitioning from a $1.1 million deficit in the year up to June 2022 to an uplifting surplus of $114 million.

The country’s cache of foreign reserves exhibited a noticeable uptick, reaching a total of $5.28 billion by the close of June 2023—a discernible climb from the $5.11 billion recorded in the corresponding timeframe of 2022.

Characterized by adequacy, these reserves effectively blanket 4.8 months’ worth of anticipated imports encompassing both goods and services. This duration surpasses the country’s minimum threshold of 4 months and the East African Community’s benchmark of 4.5 months.

However, it falls short of the Southern African Development Community’s guideline of at least 6 months’ coverage—an observation highlighted by the BoT’s comprehensive report.