THE dry spell that hit most of Tanzania for several months has sent inflation rocketing but did not affect much the country's foreign reserves, according to Bank of Tanzania (BoT).
The Bank's Deputy Governor, Mr Juma Reli, says despite the adverse weather trend that plunged the country into food supply crisis and undermined power supply, the reserves have, by and large, remained within the budget line of eight months.
The deputy governor, however, said that the amount declined slightly from last December level, which was sufficient for imports for nine months.
"Our reserve has 1.8 million US dollars, which is adequate for imports of between seven and eight months," he said.
Mr Reli said that has been possible mainly due to the International Monetary Fund (IMF) move to allow Tanzania to use part of the debt relief money to purchase food and gas-to-electricity generators.
The IMF under the Multilateral Debt Relief Initiative last year approved debt relief for Tanzania of 336 million US dollars (about 350tr/-).
Foreign reserves are calculated basing on the balance of payment between exports and imports. But the Tanzania amount is also boosted by donor supports.
According to BoT statistics for February, the country exported goods worth 1,705.6 million US dollars, an improvement of 12.5 per cent over previous year's performance where goods worth 1,516.6 million US dollars were exported.
"Travel and gold remained the dominant export categories accounting for about half of the total export earnings followed by traditional exports," BoT says in the Monthly Economic Review March report.
On the other hand, goods imports in the same month, increased further to 246 million US dollars from 231.9 million US dollars recorded in the previous month following increased in imports of capital and intermediate goods by 3.0 per cent and 24.4 percent, respectively.
"The development," BoT says "is partly explained by the drought conditions in the country, which has necessitated substantial increase in thermal electricity power generation."