Tanzania has admitted its current account is hurting after it registered a deficit of $1.31 billion in the first three months of 2022, compared with the $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,” signalling how supplies to the region have been hurt by the Ukraine invasion.
“The external sector has been affected by challenges associated with the Russia-Ukraine war coupled with the residual effects of the Covid-19 global pandemic," the Bank of Tanzania said in its 2022 Q1 report released on May 16.
The import bill and a rising debt also meant the country spent more than it earned. Total national debt rose a further $399.8 million from December to $37.84 billion by the end of March 2022 with the external debt alone accounting for $28.35 million by March. According to BoT, the central government's share of the debt increased by $125.6 million during the quarter "whereas public corporations’ debt remained almost the same and private sector external debt slightly decreased."
External loans received during the past four months amounted to $478.5 million against $154.7 million spent on debt service payments.
The domestic debt stock stood at Tsh21.78 trillion ($9.43 billion) by the end of March, an increase of Tsh656.7 billion ($284.28 million) from December 2021.
BoT said most prices of commodities "save for Robusta coffee" increased during the quarter year-on-year compared with March 2021.
"Prices of crude oil and white petroleum products edged up, escalated by the ongoing war in the wake of already persistent supply bottlenecks, and gold prices rose owing to the waning risk appetite of investors prior to the war," BoT said in its report.
It further explained that prices of agricultural commodities increased from December 2021 due to "persistent supply disruptions, increasing demand for food from neighbouring countries and low or delayed short rain season harvests."
Food inflation, which stood at 3.6 percent in March 2021, rose from 4.4 percent in December to 6.3 percent in March this year as wholesale prices for a number of basic food crops went up by significant percentages.
But according to BoT, food stocks in the country remained satisfactory during the quarter despite the rise in food prices.
Domestic fuel prices also recorded steep rises year-on-year between March 2021 and March 2022. The price of petrol rose 30.8 percent, diesel 30.1 percent and kerosene 20.2 percent.
An upward risk on food and energy inflation will continue to persist as a result of increasing pressures on food and oil prices.
from several fronts, the BoT quarterly report predicted, putting pressure on government officials to cushion the ordinary people. Last week, Tanzania said a subsidy on fuel will be launched from June 1 to alleviate pump price pain. But the officials said may have to borrow from lenders which could suggest more debt.