External debt increases by Sh782.2bn in one month

Tanzania’s country’s external debt has increased by $337.9 million (about Tsh782.2bn) in one month to $23, 193.1 billion during the year — to August 2020, from $960.7 million during the year to July 2020.
The debt remained moderate and sustainable, with low risk of debt distress, the Bank of Tanzania has said in its latest economic review report for August.
It has remained dominant, accounting for 77.5 per cent of total external debt.
The central bank says that debt owed to multilateral institutions continuing to ac- count for the largest share, at 47.1 per cent in July 2020, while debt from commercial sources was 32.7 per cent.
In terms of the composition of disbursed outstanding debt by activity, transport and telecommunications dominated, accounting for 27.1 percent of the debt, followed by social welfare and education at 17.9 percent
The domestic debt de- creased by Tsh 404.0 billion in one month between June and July 2020, to Tsh15.1 trillion, and an increase of Tsh1.5 trillion during the year ending August 2019.
According to BoT, the large portion of the domes- tic debt stock was in the form of Treasury bills and bonds, at 99.3 per cent of the outstanding domestic debt.
Debt contracted through Treasury bond continued to account for the largest share, at 83.1 per cent.
Long-term debt instruments (Treasury bonds and stocks) accounted for 84.8 per cent of the domestic debt stock, in line with the Government Medium-Term Debt Management Strategy that aims at reducing refinancing risk by lengthening the maturity of debt portfolio.
During the period, commercial banks account- ed for the largest share of domestic debt by about 35.2 per cent in July 2020.
Pension funds investment ranked second in government securities holding, ac- counting for 29.6 per cent.
Central Bank’s short- term advances to the central government continued to decline, accounting for 9.0 per cent of the total domestic debt, down from 13.3 per cent in June 2020 and 9.4 per cent in July 2019. This reflected government’s adherence to fiscal consolidation and in-
crease in revenue collection. Meanwhile, the external sector development continued to improve, reflect- ing diminishing impact of coronavirus pandemic on global supply chain. The balance of payments improved to a surplus of $149.6 million in the year ending July 2020, from a deficit of $643.8 million in the year ending July 2019. Current account deficit narrowed to $602.3 million from a deficit of $1.9 billion, on account of higher value of goods exports, coupled with decrease in import bill. The country’s foreign ex- change reserves amounted to $5.12 billion at the end of July 2020 compared with $4.8 billion at the end of July 2019. The reserves were sufficient to cover 5.9 months of projected imports of goods and services. Import cover was above the country benchmark of not less than 4.0 months — and within EAC convergence criteria of at least 4.5 months of import cover. Meanwhile, foreign assets of banks amounted to $1.1 billion at the end of July 2020, higher than $1.05 billion at the end of July 2019.