THE overall balance of payments recorded a surplus of 897.1 million US dollars in the period ended April this year, compared with a deficit of 1,082.3 million US dollars in the corresponding period of 2018/19.
According to the Bank of Tanzania (BoT) Monetary Policy Statement, the outturn was on account of narrowing of deficit in the current account to 333.3 million US dollars from a deficit of 1,620.2 million US dollars recorded in the corresponding period of 2018/19.
The improvement was largely explained by increase in exports of goods and services that increased by 18.4 per cent to 8,667.8 million US dollars over the period of July last year to April this year from the level registered in the corresponding period of 2018/19.
The good performance was mainly on account of increase in the value of service receipts and export of goods, largely driven by tourism earning, gold and cashew nuts exports.
The export of gold which accounted for 57.3 per cent of nontraditional goods exports, increased to 2,097.9 million US dollars from 1,406.3 million US dollars registered in the corresponding period, on account of both volume and favourable prices in the world market.
The higher volume of gold export corresponds to government initiatives to effectively manage mining activities in the country.
The value of traditional goods export was 989.1 million US dollars, compared with 473.7 million US dollars recorded in the corresponding period of 2018/19, mainly explained by recovery in export of cashew nuts, which surged to 498.0 million US dollars from 1.9 million US dollars recorded in corresponding period.
Services receipts rose by 1.3 per cent to 3,552.7 million US dollars from the amount registered in the corresponding period of 2018/19, largely explained by higher travel and transport receipts.
The imports of goods and services were 8,693.9 million US dollars compared with 8,681.1 million US dollars recorded in the corresponding period of 2018/19, driven by intermediate and consumer goods.
All goods import increased, with the exception of transport equipment, machinery and fertilizer.
The import of oil, building and construction materials were dominant, consistent with the ongoing implementation of the mega infrastructure projects.
The services payment rose by 5.7 per cent to 1,526.0 million US dollars on account of increase in freight payment.
The current account deficit is projected to remain moderate at 2.7 per cent of Gross Domestic Product (GDP) in 2019/20, compared with 3.5 per cent of GDP in 2018/19, as the current positive export performance is set to be sustained.
In 2020/21, current account deficit is projected to increase to around 5 per cent of GDP, as export earnings from tourism may decline largely due to Coronavirus induced impact.
This is attributable to lockdowns, travel restrictions and the anticipated economic recessions in major trading partners and tourist source markets.
Nevertheless, this downside risk is expected to be partly offset by low oil prices and buoyant gold prices in the world market.