Zitto na Demokrasia

Zitto na Demokrasia

Tanzania’s Dwindling Official Reserves: Government must explain

with 8 comments

Zitto Kabwe, MP

Shadow Finance Minister

Yesterday I issued a statement on my blog on the inefficiency of the Bank of Tanzania (BoT) in regard to publishing economic statistics. See BoT’s list of publications here. http://www.bot-tz.org/Publications/PublicationsAndStatistics.asp

Regardless of the ruling party’s outrageous response (put out by Mwigullu Nchemba & Nape Nauye), BoT did actually publish (after my blog post) on their website reports for the months of December (January report) and that of January (February report). In my statement from yesterday I did raise an alarm on the shocking decline of official reserves which I was earlier informed of by an insider.

Read my statement here in Kiswahili. https://zittokabwe.wordpress.com/2012/05/13/benki-kuu-hazina-ya-taifa-imekauka/. Find a comment to my statement in English at Swahili Street here. http://swahilistreet.wordpress.com/2012/05/13/ogp-tanzania-hows-that-working-out-central-bank-edition-with-an-update/

And reading December and January reports it does raise concerns. The December report is quoted hereunder:

“Gross official reserves amounted to USD 3,761.2 million in 2011 compared to USD 3,921.3 million in 2010, partly reflecting valuation loss on reserves held in Euro and Pound Sterling, when these currencies depreciated against the Dollar. The reserves were sufficient to cover about 4 months of projected import of goods and services”

The January report reads as below:

“Gross official reserves amounted to USD 3,565.5 million compared to USD 3,888.7 million in the year ending January 2011, and were enough to cover 3.2 months of projected import of goods and services”

Clearly reserves have been in steady decline since 2010 – they dropped from USD 3.92bn to USD 3.76bn between December 2010 and December 2011, sufficient to cover four months imports. The decline in reserves has been more dramatic this year. In January 2012 they were just USD 3.57bn. The five per cent decline in one month – December 2011 to January 2012 – has been greater than the decline over all of the previous year – a four per cent decline.

BoT did not publish the March Report (covering the month of February) and any analyst may expect a further drop. Tanzania deserves a proper explanation from the Minister for Finance and Economic Affairs.

What has happened? Is the alarming decline of our official reserves a result of BoT’s participation in the foreign exchange market to control our shilling free fall? How strong is our export performance bearing in mind raising prices of gold? Is there under invoicing of exports tantamount to illicit money transfer? Is there mispricing of oil imports for emergency power generation?

Ndugu William Mgimwa, Minister for Finance and Economic Affairs, Tanzania is waiting for answers.

Written by zittokabwe

May 14, 2012 at 10:30 AM

8 Responses

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  1. Well formulated Mheshimiwa Zitto, you are definately on top of the situation. Tanzanians are listening and we hope to get and explanation on what is going on and what has been done, what is the strategy to curb the negative spiral in the future and why hasn’t anyone raised a red flag and informed your committee..

  2. Gverment must explain;We need to know why that happen? What are necessary measures,long run and both short run to resolve the issue if migth happen at the future?.Actualy whatever President make changes in his cabinet still poor system of lack of responsibility is there[even if he put all ministers to be Professor we are still going to experience the same problem].Problem here is a Gvt System?, we dont have competent and responsible people in the Gvt thus why we need chance!!!!!?

    Elineema.J.Mosi[Chadema member]

    May 14, 2012 at 11:48 AM

  3. The TANZANIAN weiting clear eraboration from BOT governor apart from what declared by MR. KABWE ZITO

  4. Mmhhh! I think it’s time now to have a profound national economic dialog to study and scrutinize Macroeconomics eon of Tanzania since independence according to the Presidential tenure, to come up with the grave issues on each era, so as to comprehend the performance of our economy and discern which trend should be in use as of now, precise what manner of influential’s to necessitate on 2015.
    “Tumechoka kubebwa bebwa na kupelekwa pelekwa”

    George S.

    May 14, 2012 at 4:55 PM

  5. Thankyou brother Zitto, we appreciate your work!

    Simon Mwambagi

    May 14, 2012 at 8:07 PM

  6. Hon Zitto … you are a genius!! I like the way you have analysed the situation, though not in a very detailed manner. It is enough anyway, to show people what is happening.

    Regarding the BOT website, …, I think it is one of the worst organizational website in this country. I would have expected the website to be update … just by a click. But I tell you … they (BOT) staff don’t know even how many banks are operating in Tanzania right now. If you try to find this information from their website, you will notice that it was last updated in … i don’t …2010 I hope … What a shame?

    We surely need answers … just see how relaxed they are. Every shop in Dar now asks dollars!!


    May 14, 2012 at 9:20 PM

  7. Mbunge ama kiongozi yeyote makini na hasa ambae professional yake inahusu uchumi kisha akose takwimu muhimu za uchumi including inflation kwa miezi sita kwa justification kuwa BOT hawajaweka taarifa hizo mtandaoni, kisha siku BOT wakipandisha taarifa hizo, mtu huyo awe wa kwanza kutoa taarifa ya kukosoa na kushtushwa na taarifa hizo tena baada ya masaa kadhaa tu. Only demagogue can be of such kind..!


    May 14, 2012 at 9:57 PM

  8. Excellent analysis Brother Zitto, we need more people like you. We have very few people who can make a follow up on such serious matters. Poor banking system and mismanagement of cash reserves has been a sole source of financial crisis in europe and US. Our country is facing a disaster in issues related to finance, since not all voices can be heard up there, we need people like u to raise these concerns so that they can be noticed.

    To hell with Nape who can’t really analyse the figures, and Mwigulu who will boast of his academic qualification but no delivery from him


    May 15, 2012 at 1:00 AM

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