Tanzania plans to issue a debut Eurobond soon after it gets a sovereign rating in the next seven to eight months, governor Benno Ndulu said. Tanzania shelved plans to issue a debut sovereign bond because of the global financial crisis, but revived the plan in January. In May, the finance minister said it would take at least 12 months to complete the process and Tanzania would plug a financing deficit with syndicated loans.
image coutesy of traveller.org/currency
“We are in preparation right now to restart the country rating, sovereign rating. We are procuring now an advisor for a sovereign rating and for working alongside us,” Bank of Tanzania Governor, Mr Benno Ndulu, said on the sidelines of the WEF Global Redesign Summit 2010 in Doha. “The rating, we hope in the next seven to eight months to have that out of the way and follow quickly with the issuance,” he said, without giving details about the size of the planned issue.
Mr Ndulu also told Reuters Insider that central bank intervention to prevent the Tanzanian shilling weakening was not necessary and that an increase in Tanzania’s inflation rate in April was due to rising food and oil prices. Tanzania’s year-on-year inflation rose to 9.4 per cent in April from 9.0 per cent the previous month.
“The cause of the rise is not actually monetary-based. It’s been essentially exogenous because of the increase in food prices and the increase in oil prices, which are both outside of the control of monetary policy,” Mr Ndulu said. “But what we have done is try to compensate for that by tightening slightly more our monetary policy so that the pressure on prices would be relieved,” he said.
Food carries a heavy weighting in the basket of goods used to calculate inflation and a drought last year sent inflation rates soaring. Better harvests have since helped bring down the headline rate from 12.2 percent in December. Mr Ndulu said he expected the inflation rate to stay in the single-digit range. The government predicted last week it would slow to eight per cent by June this year.
“We are just entering the harvest season for food, so my expectations is that food prices should decline in May and in June, which might in this case keep us still within the single digit inflation,” the central bank governor said. “Recently, the prices of oil have come down somewhat as a result of anxieties about a recovery in Europe, that I think also will be helpful in keeping prices at the pump down.”
Mr Ndulu said intervention by the central bank to prevent the Tanzanian shilling weakening was not necessary. “Most of our selling of US dollars has been purely for liquidity management purposes. We know that the decline of the shilling against the dollar is in some ways also offset by the strengthening of the shilling against the euro and the pound.” “(With) the dollar strengthening against all currencies, an intervention wouldn’t make much sense. And in any case our best principle is only intervening when the currency gets way, way out of proportion,” he said.
The governor also said the government would be able to plug a gap after donors pledged to cut funding for Tanzania’s 2010/11 (July-June) budget by $220 million to $534 million due to concerns about the slow pace of reforms. “The country is organising itself to fill the gap without recourse to our macroeconomic stability and more efforts will be put into raising revenues. Also, a better look at our expenditures and that combination should be able to fill the gap,” Ndulu said.
Mr Ndulu also told Reuters Insider that central bank intervention to prevent the Tanzanian shilling weakening was not necessary and that an increase in Tanzania’s inflation rate in April was due to rising food and oil prices. Tanzania’s year-on-year inflation rose to 9.4 per cent in April from 9.0 per cent the previous month.
“The cause of the rise is not actually monetary-based. It’s been essentially exogenous because of the increase in food prices and the increase in oil prices, which are both outside of the control of monetary policy,” Mr Ndulu said. “But what we have done is try to compensate for that by tightening slightly more our monetary policy so that the pressure on prices would be relieved,” he said.
Food carries a heavy weighting in the basket of goods used to calculate inflation and a drought last year sent inflation rates soaring. Better harvests have since helped bring down the headline rate from 12.2 percent in December. Mr Ndulu said he expected the inflation rate to stay in the single-digit range. The government predicted last week it would slow to eight per cent by June this year.
“We are just entering the harvest season for food, so my expectations is that food prices should decline in May and in June, which might in this case keep us still within the single digit inflation,” the central bank governor said. “Recently, the prices of oil have come down somewhat as a result of anxieties about a recovery in Europe, that I think also will be helpful in keeping prices at the pump down.”
Mr Ndulu said intervention by the central bank to prevent the Tanzanian shilling weakening was not necessary. “Most of our selling of US dollars has been purely for liquidity management purposes. We know that the decline of the shilling against the dollar is in some ways also offset by the strengthening of the shilling against the euro and the pound.” “(With) the dollar strengthening against all currencies, an intervention wouldn’t make much sense. And in any case our best principle is only intervening when the currency gets way, way out of proportion,” he said.
The governor also said the government would be able to plug a gap after donors pledged to cut funding for Tanzania’s 2010/11 (July-June) budget by $220 million to $534 million due to concerns about the slow pace of reforms. “The country is organising itself to fill the gap without recourse to our macroeconomic stability and more efforts will be put into raising revenues. Also, a better look at our expenditures and that combination should be able to fill the gap,” Ndulu said.
RSS Feed
