MONTHLY ECONOMIC REVIEW

Transcription

1 March 218 a BANK OF TANZANIA MONTHLY ECONOMIC REVIEW March 218

2 b March 218

3 March 218 i Contents 1. Inflation and Food Stocks Inflation Developments Food Stocks Prices of Food Crops Monetary and Financial Markets Money Supply and Credit Interest Rates Financial Markets Treasury Bills Market Treasury Bonds Market Inter-Bank Cash Market Repurchase Agreements Inter-Bank Foreign Exchange Market Government Budgetary Operations External Sector Performance... 7 World Commodity Prices National Debt External Debt Domestic Debt Economic Developments in Zanzibar Inflation Developments Government Budgetary Operations External Sector Performance Current Account Exports Imports Statistical Tables Glossary... 23

4 ii March 218

5 March Inflation and Food Stocks 1.1 Inflation Developments Twelve-month headline inflation remained below the medium-target target of 5. percent for four months in a row, although it increased slightly to 4.1 percent in February 218 from 4. percent in the preceding month (Chart 1.1 and Table 1.1). The increase was mostly contributed by non-food inflation. On monthto-month basis, headline inflation was 1.1 percent in February 218 compared with 1. percent in the corresponding month in 217. Table 1.1: Headline Inflation and its Main Components Monthly change Base December 215 = 1 Annual change Main groups Weight Jan-17 Jan-17 Food and non-alcoholic beverages Alcoholic, tobacco and narcotics Clothing and footwear Housing, water, electricity, gas and other fuel Furnishing, housing equip and routine maintanance Health Transport Communication Recreation and culture Education Chart 1.1: Annual Inflation Rates Percent Restaurants and hotels Miscellaneous goods and services All Items (Headline inflation) Headline Food Non-food Other selected groups: Food and non-alcoholic beverages - combining food consumed at home and food consumed in restaurants Energy and fuels - combining electricity and other fuels for use at home with petrol and diesel All items less food (non-food) All items less food and energy Source: National Bureau of Statistics and Bank of Tanzania computations. -2 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Source: National Bureau of Statistics and Bank of Tanzania computations. Aug-16 Like in the preceding month, all main groups recorded annual inflation rates below headline inflation, except those for food and non-alcoholic beverages; and housing, water, electricity, gas and other fuel. Twelve-month food and non-alcoholic beverages inflation was 5.4 percent in February 218 compared with 6.3 percent in January 218 and 8.7 percent in February 217. On month-to-month basis, food and non-alcoholic beverages inflation eased to 1.4 percent in February 218, from 1.7 percent and 2.3 percent in the preceding month and corresponding month in 217, respectively (Table 1.1). Nov-16 Twelve-month non-food inflation increased to 3.3 percent in February 218 from 2.8 percent in the preceding month, but was lower than 3.6 percent in February 217. On monthly basis, non-food inflation rose to.9 percent from.4 percent in February 217. Annual energy and fuel inflation was 12.1 percent in February 218 compared with 1.4 percent and 12.3 percent in January 218 and February 217, respectively. Meanwhile, monthly energy and fuel inflation increased considerably to 3.7 percent in February 218 from.3 percent in January 218 and 1.2 percent in the corresponding month in 217. Annual inflation for all items excluding food and energy, which is used as proxy for core inflation, also increased to 1.7 percent in February 218 from 1.4 percent in January 218, but was lower than 2.2 percent in the corresponding month in 217. On month-to-month basis, all items excluding food and energy inflation was.4 percent in February 218 compared with.3 percent and.1 percent in the preceding month and corresponding month in 217, respectively.

6 2 March Food Stocks Food stocks held by the National Food Reserve Agency (NFRA) decreased to 91,313 tonnes in February 218 from 91,947 tonnes in January 218 (Table 1.2). During the month, NFRA sold tonnes of food to private traders, World Food Program (WFP) and Prisons Department. There was no purchase of new stock during the month. Table 1.2: Food Stocks Held by National Food Reserve Agency Tonnes Chart 1.2: Annual Change in Wholesale Prices of Major Food Crops Percent Maize Rice Beans January 235, , , , ,947. Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 February 228, , , , ,312.7 March 214, ,54. 68, ,443.8 April 195, , , ,278. May 195, , , ,826. June 189, ,72. 61, ,393. July 182,2. 282,41. 49, ,697. August 196, , , ,434. September 299, ,46. 86, ,43. October 426, , ,95. 89,248. November 46, , ,9. 93, Sorghum Round Potatoes Finger Millet December 466, , , ,74. Source: National Food Reserve Agency -4 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov Prices of Food Crops Wholesale prices for all major food crops maize, rice, beans, sorghum, potatoes and finger millet declined in February 218 compared to prices recorded in corresponding period in 217 save for those of rice, potatoes and finger millet (Table 1.3). On month-to-month basis, all major food crops also recorded declines in prices in February 218 except maize and sorghum. Chart 1.2 shows price developments for the major food crops in the last three years. Table 1.3: Wholesale Prices of Major Food Crops Crop to TZS per 1 kg Percentage change to Maize 15, , , Rice 175, , , Beans 183, , , Sorghum 1, , , Source: Ministry of Industry, Trade and Investment; Bank of Tanzania computations. 2. Monetary and Financial Markets 2.1 Money Supply and Credit Annual growth of money supply remained on an upward movement for two months in succession, in the wake of monetary policy easing pursued by the Bank of Tanzania since the first quarter of 217 to ensure that liquidity in banks is adequate to support economic activities. In particular, extended broad money supply (M3) recorded year-on-year growth of 11.2 percent in February 218, compared with 9.5 percent in the preceding month and 1.7 percent in the corresponding month in 217, supported by net foreign assets of the banking system and banks credit to the private sector (Chart 2.1 and Table 2.1). Potatoes 79, , , Finger millet 81, , , Source: Ministry of Industry, Trade and Investment.

7 March Chart 2.1: Developments in Money Supply 25, 2, 15, 1, 5, Mar-17 M3 Money stock (LHS) Apr-17 Source: Bank of Tanzania Note: LHS refers left hand scale and RHS, right hand scale Jun-17 Jul-17 Sep-17 M3 growth (RHS) Table 2.1: Money Supply and Components Oct-17 Dec Percent Outstanding stock Annual growth (%) Net foreign assets of the banking system 8, , , Bank of Tanzania 8, , , Banks Net domestic assets of the banking system 13, , , Domestic claims 2, , , Claims on central government (net) 4,87.9 3, , o/w: Securities held by banks 4, ,44.2 5, Claims on the private sector 16, , , Other items net -6, , , Extended broad money supply (M3) 22, , , Foreign currency deposits 6, ,45.2 6, Broad money supply (M2) 15, , , Other deposits 6, , , Narrow money supply (M1) 9, , , Currency in circulation 3, , , Transferable deposits 6, ,67.6 7, Source: Bank of Tanzania, and banks Note: --- denotes a change that exceeds 1 percent in absolute terms, and o/w, of which Chart 2.2: Annual Changes in Major Sources of Money Supply 4, 3, 2, 1, -1, -2, Mar-17 Apr-17 Jun-17 Jul-17 Sep-17 Oct-17 Dec-17 Credit to the private sector NFA of banking system Net credit to the government Source: Bank of Tanzania, and banks Note: NFA stands for net foreign assets Net foreign assets (NFA) of the banking system grew by 31.4 percent in the year to February 218, compared with 7.3 percent in the corresponding period in 217, explained by growth of net foreign assets of the Bank of Tanzania that outweighed the impact of massive decline in NFA of banks (Chart 2.3). NFA of the Bank of Tanzania grew by 36.3 percent, year-on-year, following cumulative effect of proceeds of external non-concessional loan and purchase of foreign exchange from the domestic financial market. Meanwhile, increase in banks foreign borrowing largely triggered decline in NFA of banks. Chart 2.3: Annual Changes in Net Foreign Assets of the Banking System Net foreign assets of the Bank of Tanzania Net foreign assets of the banking system Mar-17 Apr-17 Jun-17 Source: Bank of Tanzania, and banks Jul-17 Net foreign assets of banks Total domestic credit by the banking system contracted by 1. percent compared with contraction of.4 percent in the year to February 217, mainly explained by shrinkage in net credit to government from the banking system (Chart 2.4). Contraction in net credit to the government reflects slowdown in Bank of Tanzania advances to the government coupled with sizable build-up of government deposits at the Bank of Tanzania following great improvement in revenue collection and cumulative effect of proceeds from external non-concessional loan. Meanwhile, banks net credit to the government, which is reflected in the banks holding of government securities recorded annual growth of 25.3 percent in February 218 compared with 31.2 percent and 14.6 percent in the preceding month and corresponding month in 217, respectively. Sep-17 Oct-17 Dec-17

8 4 March 218 Chart 2.4: Net Credit to Government from Banking System Net credit to the government (LHS) Growth of net credit to the government (RHS) 5,4 12 Chart 2.6: Share of Outstanding Credit Extended by Banks to Major Economic Activities Percent ,5 3, ,7 1, Percent Mar-17 Apr-17 Source: Bank of Tanzania Note: LHS denotes left hand scale and RHS right hand Scale Jun-17 Jul-17 Annual growth of credit to the private sector remained positive at 1.3 percent in February 218, albeit lower than 2.1 percent in January 218 and 4.2 percent in the corresponding period in 217 (Chart 2.5). In relation to growth of credit to major economic activities, all economic activities recorded expansions except transport and communication, agriculture and trade activities. Personal loans recorded significant annual growth rate reflecting reclassification of salaried loans that were previously treated as part of loans to other services in favour of health and education. Chart 2.5: Credit to Private Sector by Banks 18, 15, 12, 9, 6, 3, Sep-17 Stock of credit to the private sector (LHS) Oct-17 Dec-17 Credit growth (RHS) Percent Personal Trade Manufacturing Agriculture Transport and Other Services Building and communication construction Source: Banks and Bank of Tanzania computations. 2.2 Interest Rates Hotels and restaurants Responding to the ease monetary policy stance, albeit with a lag, banks average lending and deposits interest rates lessened further in February 218 from the rates recorded in January 218 and the corresponding month in 217. The overall weighted average lending rate was percent in February 218 compared with percent in January 218 and 17.8 percent in the corresponding month in 217. Likewise, the overall weighted average deposit rate fell to 8.91 percent from 9.5 percent and 1.32 percent in January 218 and February 217, respectively. Specifically, one-year lending rate eased by 63 basis points from rates recorded in January 218 and February 217 to 18.1 percent. The 12-month deposit rate also fell to an average rate of 1.9 percent from 1.77 percent and percent in the preceding month and corresponding month in 217, respectively (Chart 2.7). Chart 2.7: Selected Banks Interest Rates 2 Overall time deposits rate Overall lending rate Percent 12 Months deposits rate Short-term lending rate (Up to 1 year) Mar-17 Apr-17 Source: Banks and Bank of Tanzania computations Note: LHS denotes left hand scale and RHS right hand scale Jun-17 Jul-17 Sep-17 Oct-17 Dec In terms of shares to outstanding credit to the private sector, personal loans and trade activities remained dominant, accounting for 27.2 percent and 2.2 percent, respectively. During the year to February 218, shares of stocks of credit to personal, manufacturing, and other services activities to total private sector credit stock increased, while those of other activities decreased relative to the corresponding period in 217 (Chart 2.6) Mar-17 Apr-17 Jun-17 Jul-17 Sep-17 Source: Banks and Bank of Tanzania computations. Oct-17 Dec-17

9 March Financial Markets Treasury Bills Market The Bank of Tanzania conducted two Treasury bills auctions worth TZS 34. billion in February 218 compared with TZS 29. billion offered in the preceding month. Bids received amounted to TZS 627. billion, higher than TZS billion in January 218. Out of total bids received, more than 7 percent was by banks. The Bank accepted bids worth TZS billion compared with TZS billion in the preceding month (Chart 2.8). Overall weighted average yield remained on a downward movement, averaging 5.45 percent from 6.54 percent in the preceding month and 15.2 percent in the corresponding month in 217, reflecting liquidity adequacy in the banking system percent were overnight placements. Reflecting increase in liquidity in the market, overnight interbank cash market interest rate declined further to an average of 1.83 percent from 2.74 percent in the preceding month. The overall interbank cash market interest rate also fell to an average of 1.97 percent from 3. percent (Chart 2.9). Chart 2.9: Inter-Bank Cash Market Transactions Value of overnight transactions (LHS) Value of interbank cash market transactions (LHS) Overall interbank cash market rate (RHS) Overnight interbank rate (RHS) Percent Chart 2.8: Performance in Treasury Bills Market Offer (LHS) Tender (LHS) Mar-17 Apr-17 Jun-17 Jul-17 Sep-17 Oct-17 Dec-17 1,2 Successful bids (LHS) Overall WAY (RHS) 2 Source: Bank of Tanzania. Note: LHS refers left hand scale and RHS right hand scale. 1, Mar-17 Apr-17 Source: Bank of Tanzania. Note: LHS denotes left hand scale and RHS, right hand Scale. Jun Treasury Bonds Market Jul-17 In the Treasury bonds market, the Bank of Tanzania issued 2- and 7-year Treasury bonds worth TZS 84. billion and TZS 1. billion, respectively. Both auctions were highly oversubscribed, with received bids at TZS billion for a 2-year bond and TZS 23.9 billion for a 7-year bond. The successful bids were TZS 84. billion and TZS 15. billion for the 2-year and 7-year bonds, respectively. Like in the Treasury bills auctions, yields on Treasury bonds remained on a declining trend. The weighted average yield to maturity (WAY) for the 2-year bond was 9.21 percent compared with 11.1 percent recorded in the last 2-year bond auction, while that of 7-year bond declined to percent from percent Inter-Bank Cash Market The value of transactions in the inter-bank cash market increased to TZS billion in February 218, from TZS billion January 218, of which Sep-17 Oct-17 Dec Percent Repurchase Agreements The Bank of Tanzania uses repurchase agreements (repo) and reverse repo 1 as short-term instruments to keep liquidity in banks within the required levels. During February 218, the Bank of Tanzania conducted repurchase agreement (repo) with banks worth TZS 37. billion against the maturing amount of TZS 27. billion, implying a net mop up of TZS 1. billion. This is in contrast to TZS 18. billion sold in the preceding month against maturing amount of TZS 5. billion. Like other money market rates, repo rate also fell to an average of 1.1 percent in February 218 from 2.24 percent in the preceding month (Chart 2.1). Meanwhile, the Bank conducted no reverse repo during the month under review. Chart 2.1: Reverse Repurchase Agreements Repo sales (LHS) Redemptions (LHS) Repo rate (RHS) Mar-17 Apr-17 Source: Bank of Tanzania. Note: LHS refers left hand scale and RHS right hand scale. Jun-17 Jul-17 1 Repo is initiated by the Bank of Tanzania for mopping up excess liquidity in banks, whilst reverse repo works in the opposite direction. Sep-17 Oct-17 Dec Percent

10 6 March Inter-Bank Foreign Exchange Market The value of transactions in the inter-bank foreign exchange market (IFEM) amounted to USD 186. million in February 218 compared with USD million in the preceding month. The Bank of Tanzania participated on both selling and buying sides of the market, selling USD 5.7 million and purchasing USD 5.1 million in order to maintain an orderly market and meet seasonal demand for foreign exchange. During the month, the shilling recorded a slight deprecation against the US dollar trading at an average rate of TZS 2,254.5 per US dollar from TZS 2,246.7 per US dollar in the preceding month. On annual basis, the shilling depreciated by.8 percent from TZS 2,226.5 per US dollar in February 217 (Chart 2.11). Chart 2.11: IFEM Transactions and Exchange Rate Bank of Tanzania's net sale (+)/ net purchase (-) (LHS) Banks' sales (LHS) Weighted average exchange rate (RHS) 2,3 2,25 3. Government Budgetary Operations Domestic revenue realized by the Government amounted to TZS 1,621.9 billion in February 218, of which TZS 1,576. billion were collections by the central government. Tax revenue rose by 5. percent from the amount collected in the similar month in 217 to TZS 1,138.9 billion. Meanwhile, local government collections from own sources was TZS 45.9 billion compared with TZS 36.9 billion in February 217. Chart 3.1 shows Government resources during February 217 and 218. Chart 3.1: Government Resources in February Millions of USD ,2 2,15 2,1 TZS/USD ,5 2, Taxes on imports Income tax Taxes on local goods and services Other taxes Non-tax revenue Grants Mar-17 Apr-17 Jun-17 Jul-17 Sep-17 Oct-17 Dec-17 Source: Ministry of Finance and Planning, and Bank of Tanzania computations Source: Bank of Tanzania. Note: LHS refers left hand scale and RHS right hand scale. During the month, government expenditure amounted to TZS 1,586.7 billion, of which recurrent expenditure was TZS 88.7 billion and development expenditure was TZS 76. billion (Chart 3.2). Chart 3.2: Government Expenditure in February Wages and salaries Interest costs Other recurrent expenditure Development expenditure Source: Ministry of Finance and Planning, and Bank of Tanzania computations.

11 March External Sector Performance 2 The overall balance of payments improved considerably to a surplus of USD 1,473. million in the year ending February 218 from a surplus of USD million in the year to February 217. The improvement was explained by an increase in official current transfers. Gross official reserves increased to USD 5,769.3 million at the end of February 218 from USD 4,354.1 million at end of February 217. The reserves were sufficient to cover 5.9 months of projected import of goods and services, excluding FDI financed imports. Meanwhile, gross foreign assets of banks amounted to USD million at the end of February 218. Services account improved by 32.1 percent to a surplus of USD 1,925.8 million during the year ending February 218 from the surplus in the corresponding period in 217. The improvement was on account of an increase in services receipts coupled with decline in services payments. Services receipts amounted to USD 4,14. million and was 11.2 percent higher than amount realized in the year to February 217, largely following increase in travel and transport receipts (Chart 4.1). Travel receipts rose to USD 2,45.1 million from USD 2,18.3 million on account of increase in the number of tourist arrivals, while transport receipts grew by 9. percent to USD 1,177.3 million on account of increase in transit goods to-and-from neighbouring countries. Chart 4.1: Services Receipt Millions of USD Service payments declined by 2.9 percent to USD 2,88.2 million in the year ending February 218 from amount paid in the year to February 217. The decrease was largely contributed by lower foreign payments for transport (Chart 4.2). Transport foreign payments, which accounted for the largest share of services payments of about 37.5 percent, dropped by 15.1 percent to USD million, consistent with the decline in the value of goods imports. Chart 4.2: Services Payments 1, Year ending February , Millions of USD Transport Travel Other services Source: Bank of Tanzania and commercial banks Note: Other services include construction, insurance, financial, telecommunication, computer, information, government, charges for the use of intellectual property, personal and other business services Primary income account income from capital related transactions and compensation of employees, recorded a net deficit of USD 1,259.5 million compared with net deficit of USD 1,98.4 million in the year ending February 217. The widening of the primary income account deficit was explained by increase in payments under investment income, particularly interest payments, and compensation of employees ,95.7 2,18.3 2,45.1 Year ending February ,15.5 1,8.2 Travel (Tourism) Transport Other services Source: Bank of Tanzania and banks Note: Other services include construction, insurance, financial, telecommunication, computer, information, government, charges for the use of intellectual property, personal and other business services 2 Compilation of trade statistics for the period under review had not been completed by the time of this publication due to statistical challenges associated with implementation of single custom territory under the EAC. Steps are being taken in to addressing the challenges. 1, Secondary income account balance improved by 19.7 percent to a surplus of USD million from USD million in the year ending February 217. The expansion was supported by increase in official current transfers, which more than doubled to USD million when compared to the amount received in the year ending February World Commodity Prices During February 218, world market prices of selected agricultural and non-agricultural commodities declined, save for coffee (Robusta), tea (Mombasa Auction) and cloves (Table 4.1). While prices of cloves and tea (Mombasa Auction) rose on account of higher global demand, that for coffee (Robusta) increased following production decline in

12 8 March 218 major growing countries. Meanwhile, average prices of crude oil and white petroleum products eased during the month largely explained by increase in oil production in USA and stronger US dollar. Gold prices decreased following lower demand for gold as investment portfolio. On annual basis, the world market prices of selected agricultural and non-agricultural commodities increased, except for Arabica coffee and sisal (Table 4.1). Crude oil and white products prices recorded the highest increase during the period associated with extended production cut by Organization of Petroleum Exporting Countries (OPEC) members and some non-opec countries. Price of gold increased following higher demand for gold as safe investment portfolio. Tea price rose mainly due to strong demand coupled with low supply following production decline in major producing areas contributed by unfavourable weather conditions. Conversely, prices of cotton and cloves rose mainly due to high global demand. Table 4.1: World Commodity Prices Commodity Unit measure Percentage change Year ending February Percentage change Robusta coffee USD per kg Arabica coffee USD per kg Tea (Average price) USD per kg Tea (Mombasa auction) USD per kg Cotton, "A Index" USD per kg Sisal (UG) USD per kg Cloves USD per kg Crude oil* USD per barrel Crude oil** USD per barrel White products*** USD per tonne Jet/Kerosine USD per tonne Premium gasoline USD per tonne Gold USD per troy ounce 1, , , , Source: World Bank Public Ledger, Bloomberg and Tanzania Sisal Board Note: *Average of Brent, Dubai and West Texas Intermediate, ** f.o.b. Dubai, and *** West Mediterranean of the total external debt stock, increased by USD million and USD 1,799.4 million from the amount recorded at the end of January 218 and February 217, respectively (Table 5.1). Table 5.1: External Debt Stock by Borrowers Borrower Millions of USD Amount Share (%) Amount Share (%) Amount Share (%) Central government 13, , , DOD 12, , , Interest arrears Private sector 3, , , DOD 2, , , Interest arrears Public corporations DOD Interest arrears External debt stock 17, , , Source: Ministry of Finance and Planning, and Bank of Tanzania. Note: DOD denotes disbursed outstanding debt. The composition of external debt in terms of creditor category remained almost unchanged from the previous month and corresponding period in 217, where debt owed to multilateral institutions remained dominant accounting for 47.8 percent of the external debt stock, followed by commercial debt. Table 5.2 summarizes the composition of external debt stock in terms of creditor profile. Table 5.2: External Debt Stock by Creditors Millions of USD Creditor category Amount Share (%) Amount Share (%) Amount Share (%) Multilateral 8, , , DOD 8, , , Interest arrears Bilateral 1, , , DOD , Interest arrears Commercial 5, , , DOD 5, , , Interest arrears National Debt 5.1 External Debt External debt stock comprising both public and private sector debt was USD 2,19.9 million at the end of February 218, an increase of USD million and USD 2,549.6 million from January 218 and Febarury 217, respectively. The increase in both occasions was on account of new disbursements, exchange rate flutuations and accumulation of interest arrears. Central government external debt, which continued to account for the largest share Export credit 1, , , DOD 1, , , Interest arrears External debt stock 17, , , Source: Ministry of Finance and Planning, and Bank of Tanzania. Note: DOD denotes disbursed outstanding debt. In terms of debt inflows, external loans disbursed during February 218 amounted to USD 16.5 million compared with USD 91.6 million in the preceding month, of which USD 82.3 million was received by the central government and the balance by private sector. Meanwhile, cummulative disbursements during the year ending February 218 was USD 1,762.8 million, of which USD 1,444.9 million was

13 March in favour of the central government. As regard to debt outflow (debt service), about USD 19.5 million was paid out in February 218 compared with USD 2 million in the preceding month. Debt service payments during the year ending February 218 amounted to USD 1,22.6 million, of which USD million was principal repayment and the balance was interest payment. 5.2 Domestic Debt Central government domestic debt stock, including overdraft, amounted to TZS 13,742. billion at the end of February 218, an increase of TZS 33.7 billion from the debt stock at the end of the preceding month and TZS 3,93.1 billion from the end of the corresponding month in 217 (Chart 5.1). Chart 5.1: Government Domestic Debt Stock 7, , , ,134. 3, ,97.1 2, , , ,742. Feb.9 Feb-1 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Source: Bank of Tanzania. Debt of longer maturity (Treasury bonds and stocks) continued to dominate the stock of domestic debt, all together accounting for 68.6 percent of the debt stock, up from 67.5 percent and 66.6 percent in January 218 and February 217, respectively (Table 5.3). This profile bodes well with the mediumterm debt management strategy, which entails lengthening maturity profile of domestic debt in a bid to reduce refinancing risk. Table 5.3: Government Domestic Debt by Borrowing Instruments Amount Share (%) Amount Share (%) Amount Share (%) Government securities 1, , , Treasury bills 3, , , Government stocks Government bonds 6, , , Tax certificates Non-securitized debt , Other debt Overdraft , Domestic debt stock 1, , , Source: Bank of Tanzania In terms of domestic debt stock by holders, commercial banks remained dominant, accounting for 41. percent of the stock at the end of February 218, followed by pension funds and the Bank of Tanzania at 27.9 percent and 18.1 percent, respectively (Table 5.4). Table 5.4: Government Domestic Debt by Holders Amount Share (%) Amount Share (%) Amount Share (%) Commercial banks 4, , , Bank of Tanzania 1, , , Pension funds 2, , , Insurance 1, , , BOT's special funds Others Domestic debt stock 1, , , Source: Bank of Tanzania Note: Others include other public institutions, private companies and individuals. Government securities Treasury bills and bonds issued in February 218 for budget financing during the month amounted to TZS billion, of which TZS billion was Treasury bills. Cumulative domestic debt raised through Treasury bills and bonds during the year to February 218 was TZS 7,243.1 billion, of which TZS 4,353.8 billion was Treasury bills (Chart 5.2). Chart 5.2: Domestic Debt Issued for Financing Mar-17 Apr-17 Treasury bills Jun-17 Jul-17 Source: Bank of Tanzania. Note: Figures on top of each bar are totals Treasury bonds Domestic debt that fell due for payment in February 218 was TZS billion compared with TZS billion in the preceding month. Out of debt matured in February 218, principal amounting to TZS 467. billion was rolled over whist interest amounting to TZS billion was paid out of government resources. Cumulative debt service during the year ending February 218 amounted to TZS 6,51.9 billion, out of which TZS 4,766.8 billion was rolled-over and TZS 1,285.1 billion was paid out of the government resources. Sep-17 Oct-17 Dec-17

14 1 March Economic Developments in Zanzibar 6.1 Inflation Developments Twelve-month headline inflation in Zanzibar eased to 4.8 percent in February 218 from 5.2 percent in the preceding month, but was higher than 4.5 percent registered in February 217 (Table 6.1 and Chart 6.1). On month-to-month basis, headline inflation contracted by.1 percent compared with an increase of.2 percent in February 217. Twelve-month food inflation slowed to 1.2 percent from 1.7 percent in January 218 following a decrease in prices of maize flour, sugar and banana. Non-food inflation was 7.6 percent in February 218 compared with 7.7 percent in January 218 and 4.5 percent in February 217. The increase in annual non-food inflation between February 218 and February 217 was driven by fuel prices, which rose by 11.3 percent. Table 6.1: Inflation Developments Base: January 217=1 Monthly change Annual change Main Groups Weight Jan-17 Jan-17 Food and non-alcoholic beverages Alcoholic beverages, tobacco and narcotics Clothing and footwear Housing, water, electricity, gas and other fuels Furnishing, household equipment Health Transport Communication Recreation and culture Education Restaurants and hotels Miscellaneous goods and services All items (Headline inflation) Non-food Source: Office of Chief Government Statistician and Bank of Tanzania computations Note: New weights base on Zanzibar 214/15 Household Budget Survey (HBS) Chart 6.1: Twelve-Month Inflation Developments Percent Feb-15 May-15 Aug-15 Headline Food Non-food Nov-15 Feb-16 May-16 Source: Office of Chief Government Statistician and Bank of Tanzania computations Aug-16 Nov Government Budgetary Operations Government resource envelope comprising domestic revenue and grants amounted to TZS 61.2 billion in February 218, of which TZS 59.7 billion was domestic revenue and the balance was grants. Tax revenue amounted to TZS 5.8 billion and accounted for 85. percent of domestic revenue, whereas non-tax revenue was TZS 9. billion (Chart 6.2). Revenue collections performed below February 218 targets by 3.1 percent largely due to underperformance of tax on imports. Revenue from non-tax and income tax was above the targets for the month by 21.8 percent and 6. percent, respectively. Foreign grants amounted to TZS 1.5 billion, above the projection of TZS.8 billion. Cumulative revenue collection for the July 217 to February 218 period was generally satisfactory. Total collections amounted to TZS billion, equivalent to 97.3 percent of projections for the period. Chart 6.2: Government Resources in February Tax on imports VAT and excise duties (local) Income tax Other taxes Non-tax revenue Grants Source: Ministry of Finance and Planning - Zanzibar Note: Other taxes include hotel and restaurant levies, tour operator levy, revenue stamps, airport and seaport service charges, road development fund and petroleum levy The Government continued to streamline expenditure based on budget estimates for the month, priorities and available resources. As a result, the Government spent TZS 63.7 billion in February 218, which was 92.1 percent of the estimates for the month. Recurrent expenses amounted to TZS 45.9 billion and development expenditure was TZS 17.9 billion (Chart 6.3). External financing for development projects amounted to TZS 13.6 billion, while TZS 4.2 billion was from domestic sources. Cumulatively, from July 217 to February 218 the Government expenditure amounted to TZS billion, equivalent to 88.7 percent of estimates for the period.

15 March Government fiscal operations led to overall deficit after grants of TZS 12.2 billion in February 218, which was higher than a deficit of TZS 3.5 billion in the preceding month. The deficit was financed through program loans. Chart 6.3: Government Expenditure in February Wages and salaries Other recurrent expenditure Development expenditure Source: Ministry of Finance and Planning - Zanzibar Note: Other expenditure include transfers, domestic debt interest, consolidated fund service and other charges 6.3 External Sector Performance Current Account The current account recorded a surplus of USD 32.5 million in the year ending February 218 compared with a surplus of USD 5.9 million in the corresponding period in 217, owing to increase in imports of both goods and services. The goods account recorded a deficit of USD 18. million compared with a deficit of USD 76.5 million in the year to February 217, while services account recorded a surplus of USD 94.6 million compared with TZS 98.9 million (Table 6.2). Table 6.2: Current Account Balance Millions of USD Year ending February Percentage P p change Goods account Exports Imports (fob) Services account Receipts Payments Goods and services Exports of goods and services Imports of goods and services Income account Receipts Payments Current transfers Inflows Outflows Current account balance Source: Tanzania Revenue Authority and Bank of Tanzania computations Note: p denotes provisional data; --- denotes change that exceeds 1 percent, in absolute terms Exports Foreign exchange earnings from exports of goods and services increased by 21.6 percent to USD million in the year ending February 218, following improvement in exports of major export commodities cloves, seaweeds and manufactured goods which altogether accounted for 96.8 percent of total earnings from goods exports (Table 6.2 and Table 6.3). Earnings from export of cloves amounted to USD 52. million compared with USD 21.5 million in the year to February 217, mainly on account of volume, which rose to 6,586 tonnes from 2,741 tonnes. Seaweeds exports earnings also improved to USD 3.2 million from USD 2. million following increase in the volume. Manufactured goods export 3 earnings amounted to USD 4.8 million compared with USD 3. million. Meanwhile, exports of fish and fish products rose greatly following large increase in exports of octopus, squids, shrimps, live lobster and crabs. Table 6.3: Goods Export Performance Year ending February Percentage change Units P p Traditional exports: Clove Value '' of USD 3, , , , Volume '' tonnes Unit price USD/Tonne 7, ,9. 7,8. 7, , Non-traditional exports: Seaweeds Value '' of USD , , Volume '' tonnes Unit price USD/Tonne Manufactured goods '' of USD 1, ,42.5 4, Fish and fish products '' of USD Others exports '' of USD , , Sub-total '' of USD 1, ,72.7 1, Grand total '' of USD 5,8.1 2, , , Source: Tanzania Revenue Authority and Bank of Tanzania Note: p denotes provisional data; other exports mainly include souvenirs and spices; and --- change that exceeds 1, in absolute terms Imports Imports of goods and services (fob) rose to USD 236. million from USD 16.7 million in the year ending February 217, driven by both services payments and goods imports. The increase in the cost of goods import occurred mostly in consumer and intermediate goods, which contributed 49. percent and 39.3 percent to the increase, respectively. Value of consumer goods imports mostly rice, sugar, wheat flour and cooking oil increased, while oil imports which accounts for 7.1 percent and 43.7 percent of the value of intermediate goods imports and total imports (c.i.f), respectively, increased to USD 55.1 million from USD 42.1 million on account of both volume and price effects (Table 6.4). 3 Includes manufactured goods re-exports

16 12 March 218 Table 6.4: Zanzibar Goods Imports by Major Categories Millions of USD Year ending February P p Percentage change Capital goods Transport equipment Building and construction Machinery Intermediate goods Oil imports Industrial raw materials Consumer goods Food and foodstuff All other consumer goods Grand total (c.i.f) Grand total (f.o.b) Source: Tanzania Revenue Authority and Bank of Tanzania computations Note: p denotes provisional data; and --- change that exceed 1 percent in absolute terms

17 March Table A1: Selected Economic Indicators Statistical Tables Unit r 216 p National accounts and prices 1.1 Change in GDP at current prices Percent Change in GDP at constant prices Percent GDP per capita-current prices (TZS) TZS 1, ,48.2 1, ,73.4 1, , GDP per capita-current prices (USD) USD , Change in consumer price index (Inflation) Percent Saving to GNDI ratio Percent Money, credit and interest rates 2.1 Change in extended broad money supply (M3) Percent Change in broad money supply (M2) Percent Change in narrow money supply (M1) Percent Change in reserve money (M) Percent Total credit to GDP ratio 1 Percent Non-governmentsector credit to GDP ratio 1 Percent Ratio of credit to non-government sector to total credit Percent Months deposit rate 2 Percent Overall treasury bill rate 2 Percent Long-term lending rate 2 Percent Balance of payments 3.1 Exports of goods (f.o.b) Mill. USD 5,97.9 5, , , , , Imports of goods (f.o.b) Mill. USD -9, , ,29.1-1, , , Trade balance Mill. USD -4, , , , , , Current account balance Mill. USD -4,38.9-3, , , , , Overall balance Mill. USD Gross official reserves Mill. USD 3, ,68.1 4, , ,93.7 4, Reserves months of imports (of goods and services) (excluding FDI related imports) Months Exchange rate: Annual average TZS/USD 1, , , , , ,177.1 End of period TZS/USD 1, , , , , , /12 212/13 213/14 214/15 215/16 216/17 r Public finance 4.1 Current revenue to GDP ratio 1 Percent Grants to GDP ratio 1 Percent Current expenditure to GDP ratio 1 Percent Development expenditure to GDP ratio 1 Percent Budget balance to GDP ratio (excluding grants) 1 Percent Budget balance to GDP ratio (including grants) 1,3 Percent Total external debt stock Mill. USD 1,67. 12, , , , , Disbursed debt Mill. USD 9, , , , , , Interest Mill. USD 1, , ,64.8 1, , ,399.9 Source: Bank of Tanzania Note: 1 Calculated on the basis of GDP at current market prices; GNDI stands for Gross National Disposable Income; 2 annual average; 3 includes expenditure float, and adjustment to cash and other items (net); r denotes revised data; and p, provisional data

18 14 March 218 Table A2: Central Government Operations (Cheques Issued) Tanzania Mainland Million of TZS Budget July February 218 February /18 Estimate Actual Estimate Actual Total revenue (including LGAs) 19,977,1.5 13,158, ,854, ,472, ,621,926.3 Central government revenue 19,289, ,691, ,52, ,419,39.1 1,575,995.2 Tax revenue 17,59, ,321, ,967,4.3 1,283, ,138,941.6 Taxes on imports 6,292, ,339, ,653, , ,414.6 Sales/VAT and excise on local goods 3,865, ,642, ,363,7. 3, ,963.1 Income taxes 5,81, ,588, ,217, ,.9 347,831.8 Other taxes 1,91, , , , ,732.2 Non-tax revenue 2,23,56.3 1,37,24.3 1,535, , ,53.6 LGA own sources 687, , , , ,931. Total expenditure 1 25,581, ,624, ,279, ,131, ,586,675. Recurrent expenditure 13,581, ,258,45.6 7,57, ,189, ,725.5 Wages and salaries 7,25, ,733, ,218, , ,81.9 Interest payments 1,699,37.6 1,459, ,35, , ,51.3 Domestic 1,25, , , , ,352.5 Foreign 673, , , , ,157.8 Other goods, services and transfers 4,676,78.1 3,64,86.4 2,1, , ,44.3 Development expenditure and net lending 11,999, ,366, ,78, , ,949.5 Local 8,969,747. 6,253, ,369, , ,736.4 Foreign 3,29, ,112, ,338, , ,213.1 Balance before grants -5,64,14.3-4,465, , , ,251.3 Grants 1,43, ,15, , , ,856.6 Program 19, ,22.6 7, Project 653, , , , ,856.6 Basket funds 2, , , , Balance (cheques issued) after grants -4,56, ,36, , , ,17.9 Expenditure float.. -71, Adjustments to cash and other items (net) , ,527.3 Overall balance -4,56, ,36, , , ,635.1 Financing: 4,56, ,36, , , ,635.1 Foreign financing (net) 3,339, ,259, , , ,89.5 Loans 4,522, ,15, ,46, , ,356.5 Program loans 751, Development project loans 3,415,56.6 1,86,337. 1,46, , ,356.5 o/w: Non-concessinal borrowing 1,594, , , Basket support 355, , Amortization -1,182, , , , ,466. Domestic (net) 2 1,22,668. 2,11, , , ,525.6 Bank and non-bank financing 1,22,668. 2,11, , , ,525.6 Bank borrowing 1,98,61.2 1,891, , , ,182.7 Non-bank (net of amortization) 122, , , , ,342.9 Borrowing/roll-over 4,948,229. 3,183, ,245, , ,35.2 Domestic and contingent debt amortization -4,948, ,183, ,245, , ,35.2 Source: Ministry of Finance and Planning Note: 1 Exclude amortization and expenditure float, includes road fund and retention expenditure 2 positive value means financing and a negative value means repayment or build-up of deposits LGA stands for Local Government Authority, VAT, value added tax, MDRI, multilateral debt relief initiative, MCA(T), millenium challenge account (Tanzania) and NDF, net domestic financing

19 March Table A3: Depository Corporations Survey Items Mar-17 Apr-17 Jun-17 Jul-17 Sep-17 Oct-17 Dec-17 P Net foreign assets 8, , ,18.9 8,95.9 9, , ,27.8 1, , , , , ,196.2 Bank of Tanzania 8,575. 8, , , ,16.8 1, ,19. 11, , , , , ,687.6 Other depository corporations Net domestic assets 13, , , , , , , , ,62. 13, , , ,681.8 Domestic claims 2, , , , ,38.9 2, , , , , , , ,531.1 Claims on central government (net) 4,87.9 4,11.3 4, , , , ,31.7 3, , ,543. 3, , ,675.4 Claims on central government 7, , , , ,79.8 8,63.7 7,842. 7, ,97. 8, ,66.5 8,225. 8,512.7 Liabilities to central government 3,7.6 3, , ,67.5 4, ,56. 4, ,61.3 4,62.3 4,73.5 4,79.8 4, ,837.3 Claims on non-government sector 16, , , , , , , , , , , , ,855.6 Other items (net) -6, , , , , ,83.6-6, , , , ,53.1-7, ,849.3 Broad money liabilities 22, , , , , , , , , , , , ,877.9 Currency outside depository corporations 3, , ,369. 3, , , , ,69.1 3, , , , ,614.4 Transferable deposits 1, , , , , , , , , ,64. 11, , ,48. Non-transferable (other) deposits 8, , , , , , , , , , ,87. 9, ,855.5 Memorandum Items: Monetary aggregates Reserve money (M) 6, , , ,56.4 6, ,79.6 6, , , , , , ,143.2 Extended broad money (M3) 22, , , , , , , , , , , , ,877.9 Deposits in foreign Currency (FCD) 6, , ,.3 6, , ,194. 6, ,37.2 6, ,459. 6, ,45.2 6,7.1 FCD in millions of USD 2, , ,694. 2, ,77.2 2, , , , , , , ,984.8 Broad money (M2) 15, , , , , , , , , , , , ,177.9 Other deposits in national currency (i.e. savings and time deposits) 6, ,694. 6, , , , , , , , , , ,22.3 Narrow money (M1) 9, , , , , , , , , , , , ,975.5 Currency in circulation 3, , ,369. 3, , , , ,69.1 3, , , , ,614.4 Transferable deposits in national currency 6, ,33.1 6, ,16.5 7,256. 7,94.4 6, ,683. 6, , , ,67.6 7,361.1 Source: Bank of Tanzania Note: p denotes provisional data