Tanzania’s foreign currency situation is expected to continue improving, thanks to various factors. Foreign exchange inflows from tourism, export crops, and minerals, along with measures implemented by the Bank of Tanzania (BoT) and the government, contribute to this positive trend.

According to the latest statement from the Monetary Policy Committee (MPC) released by the Central Bank, foreign exchange reserves remained above $5 billion from July to October 2023. This level of reserves ensures that the country meets the import cover standards set by both Tanzania and the East African Community (EAC), which require a minimum of 4 and 4.5 months, respectively.

The MPC also highlighted that the recent shortage of foreign currency is gradually improving thanks to earnings from various sectors, including tourism, minerals, manufacturing, and cash crops. Additionally, the Bank of Tanzania’s participation in the interbank foreign exchange market, which sells foreign exchange to address the accumulation of foreign currency-denominated loans extended to importers, has played a significant role in this improvement.

On the other hand, Tanzania’s current account deficit has narrowed but remains relatively high. In September 2023, the current account deficit decreased to $3.65 billion compared to $4.72 billion in September 2022. Increased earnings from the tourism sector mainly drove this improvement. Furthermore, the statement anticipates that the current account position will improve gradually, primarily due to earnings from tourism, gold, and traditional export crops.

Regarding Zanzibar, its current account deficit widened to $417.1 million in September 2023, up from a deficit of $344.8 million. This increase was primarily due to higher imports of goods and services.