October 27, 2011

Oil demands keep shilling struggling

The value of Tanzania oil imports more than doubled between July and August due to both increased demand to cushion power shortages and skyrocketing prices in the global market, the central bank has said. The high oil import bill has been the major cause of a weakening shilling that has significantly increased the cost of living as indicated by the rising inflation. The shilling, which has lost about 200 units since the beginning of the year, has led to higher commodity prices and increased budget constraints for households. The country spent $181 million (Sh308 billion) more in August to import oil compared to the previous month, the Bank of Tanzania said in a latest report.

“The import bill in August was $469 million (Sh797 billion) an increase of 63 per cent from $288 million (Sh490 billion) in July due to high prices at the global market and increased demand for thermal power generation,” reads the monthly economic review report. On annual basis oil imports also increased by 36 per cent to $2.6 billion between August 2010 and August 2011 to push the total import bill further to $10.8 billion. The 3.4 million tonnes imported in the twelve months increased the share oil to total imports to 30 per cent, an increase from 24 per cent three years ago. The increase in imports was not matched by exports hence widening the current account deficit by 30.4 per cent to $3.6 billion in the year ending August.

In the period under review Tanzania exported goods and services worth $6.6 billion, a slight increase from $5.4 billion in the year ending August 2010, largely attributed to the increase in gold prices in the world market, demand for manufactured goods in the neighbouring countries as well as the increase in unit prices of coffee and cashew nuts, export volume of tobacco and more tourist arrivals. Earnings came from gold sales, manufactured goods particularly cement, textile apparels, edible oil, plastic items, iron and steel products, wheat flour as well as paper and paper. Tanzania also exported services worth $2.4 billion in the same period according to the BoT. (The Citizen Reporter)

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