Mar 22, 2023

Mawazo Writing Africa

Writing about the main

Tanzania economy feels the heat from Ukraine war

Tanzania has admitted its current account is suffering after registering a deficit of US$1.31 billion in the first three months of 2022, compared with the US$352 million it recorded in the corresponding period last year According to the Bank of Tanzania, this is due to “a steady increase in the import bill, particularly for refined white petroleum products,” indicating how supplies to the region have been affected by the invasion of Ukraine.

“The external sector has been hit by the challenges related to the war between Russia and Ukraine combined with the aftermath of the global Covid-19 pandemic,” the Bank of Tanzania said in its March 16 The first quarter 2022 report released on May 2022 import bills and rising debt also meant the country was spending more than it was taking in. Total government debt rose w from December another $399.8 million to $37.84 billion by the end of March 2022, with external debt alone accounting for $28.35 million by March, according to BoT, the central government’s share of the debt rose during the Quarterly up $125.6 million, “while public company debt remained almost flat and private sector external debt decreased slightly.”

External loans received over the past four months totaled 478.5 million US$ versus US$154.7 million spent on debt service payments.

The domestic debt stood at Tsh21.78 trillion (US$9.43 billion) at the end of March, a Increase of Tsh656.7 billion (US$284.28 million) vs. Dec 2021.

BoT said most commodity prices “except for Robusta coffee” in the quarter were YoY compared to March 2021.

“The prices for “Crude oil and white petroleum products have edged up, escalated by the ongoing war in the wake of already ongoing supply shortages, and gold prices rose as pre-war investors’ risk appetite waned,” BoT said in its report.

It explained further that soft commodity prices rose from December 2021 due to “ongoing supply disruptions”. , increasing demand for food from neighboring countries and poor or delayed harvests in the short rainy season.”

Food inflation, which was 3.6 percent in March 2021, rose to 6 on December from 4.4 percent .3 percent in March this year as wholesale prices of a number of staples rose by significant percentages.

However, according to the BoT, food stocks in the country remained satisfactory despite the rise in food prices during the quarter.

< p>Domestic fuel prices also saw strong year-on-year increases between March 2021 and March 2022. Gasoline prices rose 30.8 percent, diesel 30.1 percent and kerosene 20.2 percent.

An upside risk for food and Energy inflation will come from rising pressures on food and oil prices continue.

On several fronts, the BoT quarterly report forecast and put pressure on government officials to cushion ordinary people. Last week, Tanzania announced that it will introduce a fuel subsidy from June 1 to ease pump price pains. But officials said they may need to borrow from lenders, which could indicate more debt.