Tanzania is reeling from a shortage of dollars that has pushed up the cost of goods with the price of petrol rising the sharpest at 17 percent a litre, just months after Dar boasted of enough greenback in the reserves.
Tanzania’s Energy and Water Utilities Regulatory Authority has attributed the rise in the cost of fuel to a shortage of dollars that has made imports expensive on the back of a weakening shilling.
In March, Tanzania President Samia Suluhu mocked Kenya over a shortage of dollars that East Africa’s largest economy has been grappling with for months now, saying Dar had sufficient to meet its imports.
“Don’t be cheated, the Tanzanian economy is better than our neighbours. We have foreign currency reserves to last four months (of import cover) but if you go to our neighbours, they don’t even have reserves to last a week,” Ms Samia was quoted by a local media in an apparent reference to Kenya.
Tanzania is now feeling the hit with limited dollars to ship in goods in an economy that largely depends on imports to meet most of its needs.
Tanzania shilling has so far depreciated in value against the US dollar with a unit exchanging at Tsh2,500 from Tsh2,300 in January this year.
Tanzania’s energy regulator says a litre of petrol has jumped from Tsh2,736 last month to Tsh3,199 in August, highlighting the impact that the shortage of the dollar is having on the country’s economy.
Kenya’s President William Ruto’s resorted to government-to-government procurement of fuel with the Gulf that has seen state-owned Saudi companies supply fuel to a Kenyan marketing company of their choice for onward distribution to other local players.
The Ruto-led administration has already floated a tender of nine months under the new arrangement in a policy shift from the usual open tender system where oil marketers compete to procure fuel.