The Tanzanian shilling has gained ground against the United States dollar in the past two weeks, thanks to a steady flow of the greenback from Tanzanian tourism, exports and funds from development partners.
Two weeks ago, the Bank of Tanzania quoted the local currency against the greenback at Sh2,288/Sh2,310, and has since improved to Sh2,284.9/Sh2,307.75.
Similarly, while it was being quoted at Sh2,313/Sh2,337.5 against the US dollar in commercial banks two weeks ago, it was yesterday quoted at Sh2,290/2,320.
Appreciation of the shilling against the dollar – a currency in which international purchases are made – means that local prices of imported goods, including petroleum products, capital goods, clothes and cooking oil, among others, would not be negatively affected by the value of the local currency.
The Bank of Tanzania (BoT) predicts that the shilling will remain stable in the coming months, saying that the appreciation actually started in July this year.
The director for Economic Research and Policy at the Central Bank, Dr Suleiman Missango, said the appreciation means that both importers and exporters are able to make sound business decisions.
He said since July this year, there has been an increase in foreign exchange inflows, sourced from a number of areas, including exports and from development partners, particularly, funds from the International Monetary Fund (IMF).
On September 7, 2021, IMF approved nearly $567 million in emergency lending for Tanzania’s health-care system and economic-recovery efforts as the nation battles the coronavirus pandemic.
Of the money, $189 million was to be released under the Rapid Credit Facility, while $378 million was to be released under the Rapid Financing Instrument.
The resources are meant to pay for Tanzania’s “urgent balance of payment needs” stemming from the coronavirus, the IMF said, noting that the Covid-19 outbreak had led to the collapse of the tourism sector - and, thus, the need for significant financing.
According to Dr Missango, however, there has also been a fairly good performance of some exports in the past few months while tourism receipts have been improving since the global economic recovery from the Covid-19 pandemic started to be seen.
The BoT’s latest Monthly Economic Review (MER) says Tanzania earned $2.941 billion from gold exports during the year to August 2021, a significant improvement from the $2.735 billion during a similar period last year.
“This was largely boosted by relatively high prices in the world market,” the BoT says.
Tanzania’s also recorded a 33.2 percent rise in exports of manufactured goods in the year to August 31, 2021.
The goods - mostly ceramic products, cosmetics, plastic products, iron and steel - brought in a total of $1.125 billion in the year which ended on August 31, 2021.
“Most of the manufactured goods were destined to DRC, Zambia, Uganda, Rwanda, Burundi and Malawi,” the BoT says.
A massive rise in exports of edible vegetables - including peas, green beans, onions and tomatoes - saw Tanzania’s horticultural exports reaching $370.8 million during the year to August 31, 2021, from $181.8 million in the same period last year.
Exports of oil seeds, cereals, cocoa, raw hides and skins, and wood products earned a staggering $1.277 billion for Tanzania in the year to August 31, 2021, rising by 71.5 percent from the $744.4 million earnedin the year to August 31, 2020.
“Exports are performing better than last year when the Covid-19 pandemic was at its peak,” said Dr Missango.
The BoT says though on year-to-year basis there was a reduction in the number of tourists and therefore tourism receipts, the situation was improving gradually if measured on monthly basis.
“In August 2021 for instance, services receipts increased to $262.8 million compared with $150.6 million in August 2020, owing to a rise in travel receipts, suggesting a gradual pickup of tourism activities from last year,” the BoT says.
Source: BoT and The Citizen Newspaper...!!!
