By: Zawya

Tanzania reported steady foreign exchange flows from gold, tourism and cash crops in the second quarter of this year, a new central bank report shows.

The Bank of Tanzania (BoT) Monetary Policy Report for July stated that the enforcement of Section 26 (2) of the Bank of Tanzania Act, which bans the use of foreign currency for domestic transactions, had also significantly increased foreign currency flows through formal channels.

BoT had estimated the quarterly growth at 5.5 percent during the second quarter, from 5.8 percent recorded during the first quarter, but says that indicators have continued to show a strong growth.

Apart from the direct foreign exchange earnings, power supply and cement production mostly for local construction are supporting growth, the BoT report said.

Electricity generation rose by 20.1 percent in the first quarter, largely due to hydroelectric output from the Julius Nyerere Hydropower Project.

Large-scale gold production and sales from small- and medium-scale producers through mineral marketing centres also recorded notable gains.

BoT purchased 5.022 tonnes of gold valued at $554 million, surpassing its purchase target of $350 million from three local refining plants.

Tourism also recorded significant growth, with 2.2 million tourists visiting Tanzania and injecting $3.83 billion into the economy.

Inflation rates remained low, a situation the central bank attributes to prudent monetary policy and a continued moderation in non-food and energy prices. Headline inflation averaged 3.2 percent, remaining within the target of three percent to five percent and consistent with the convergence criteria set by the Southern African Development Community (SADC) and the East African Community (EAC).

Foreign exchange liquidity is expected to improve further in the second half of the 2025 through seasonal crop harvesting and an increase of tourists during the tourist peak season, June to October and December.

The ongoing campaign to use the Tanzanian shilling for local transactions is expected to ease the demand for foreign currency and strengthen the shilling.