Tanzania Records $1.31 Billion Deficit in Q1 2022 on High Import Bills

Tanzania Records $1.31 Billion Deficit in Q1 2022 on High Import Bills

Tanzania has recognised that its account is suffering after posting a $1.31 billion deficit in the first three months of 2022, compared to $352 million in the same period last year.

This is due to “a constant increase in the import cost, particularly for refined white petroleum products,” according to the Bank of Tanzania, indicating how the Ukraine invasion has harmed regional supply.

“Challenges related with the Russia-Ukraine war, together with the lingering impacts of the Covid-19 global pandemic, have had an impact on the external sector,” the Bank of Tanzania noted in its 2022 Q1 report.

The country also spent more than it generated due to the import bill and mounting debt. By the end of March 2022, the entire national debt had increased by $399.8 million from December to $37.84 billion, with the external debt alone accounting for $28.35 million. The central government’s debt climbed by $125.6 million during the quarter, according to the BoT, “while public businesses’ debt remained nearly unchanged and private sector external debt somewhat dropped.”

External loans totaled $478.5 million in the last four months, compared to $154.7 million spent on debt service payments. By the end of March, the domestic debt stock had risen to Tsh21.78 trillion ($9.43 billion), up Tsh656.7 billion ($284.28 million) from December 2021.

Most commodity prices climbed year over year during the quarter, except for Robusta coffee, according to the Bank of Thailand.

“Prices of crude oil and white petroleum products edged higher, exacerbated by the ongoing war in the wake of already chronic supply bottlenecks, while gold prices surged owing to investors’ diminishing risk appetite prior to the war,” according to the Bank of Tanzania’s report.

Prices of agricultural commodities began to rise in December 2021 as a result of “consistent supply disruptions, rising demand for food from neighbouring nations, and low or delayed short rain season harvests,” according to the report.

Food inflation increased from 4.4 percent in December to 6.3 percent in March this year, up from 3.6 percent in March 2021. Wholesale prices for a variety of basic food crops increased by considerable percentages.

Despite the rise in food costs, food stocks in the country remained adequate during the quarter, according to the BoT.

Between March 2021 and March 2022, domestic fuel costs rose dramatically year after year. Petrol increased by 30.8 percent, diesel by 30.1 percent, and kerosene by 20.2 percent.

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