DAR ES SALAAM: The Monetary Policy Committee (MPC) has said the shortage of foreign currency is gradually improving owing to earnings from tourism, minerals, manufacturing and cash crops.
The MPC 228th meeting was held last week to assess the implementation of monetary policy and review the recent performance of the economy and outlook.
The MPC report said the condition of foreign currency in the country will continue to improve due to inflows from various sectors.
“The foreign currency condition is expected to continue improving in the wake of foreign exchange inflows from tourism, export crops and minerals as well as measures taken by the BoT and the government to address the situation,” the MPC report stated.
The report said the Bank of Tanzania (BoT) participation in the interbank foreign exchange market by selling foreign exchange to address the accumulation of foreign currency denominated loans extended to importers has also contributed to the improvement.
The foreign exchange reserves remained above 5 billion US dollars in July-October this year with import cover within the country’s and EAC benchmarks of at least 4 and 4.5 months, respectively.
The MPC report noted also that the implementation of the less accommodative monetary policy successfully maintained liquidity in the economy at appropriate levels in August, September and October this year.
This, combined with supportive fiscal and structural policies, has contained inflationary pressures, facilitated economic activities, and preserved the stability of the financial sector amidst challenges in the global economic environment.
The policy stance has also helped to reduce foreign currency demand pressure.
The MPC said further that the rise in earnings from tourism has contributed to the narrowing of the current account deficit to 3,652.6 million US dollars year-on-year in September from 4,728.2 million US dollars in September last year.
“The current account position is expected to gradually improve, driven by earnings from tourism, gold and traditional export crops,” noted the report.
In light of this background, the MPC decided to sustain the less accommodative monetary policy.
The policy stance will continue to be implemented in close collaboration with fiscal and structural policies.
Monetary policy measures will also be implemented to achieve the targets under the Extended Credit Facility Programme for the quarter ending December this year.