TODAY’S EXCHANGE RATES:

Sat., Jun 08, 2013

1 USD = 1636.50 TZS

1 EUR = 2163.2893 TZS

1 GBP = 2545.821 TZS

1 ZAR = 163.927 TZS

US, CHINESE PRESIDENTS TO MEET IN CALIFORNIA ON TOUGH ISSUES

U.S. President Barack Obama and his Chinese counterpart Xi Jinping are to meet in California Friday and Saturday to discuss important issues in an informal setting.

 Obama will host the Chinese president at Sunnylands estate near Los Angeles, where the two leaders will address U.S. concerns about China's reported cyberspace attacks on the U.S. military and businesses as well as China's demands for easier access to U.S. markets.

 U.S. Defense Minister Chuck Hagel issued a stern warning to Beijing at a recent security forum in Singapore, saying that Internet hacking is a danger to every country including China. The two countries are expected to work on a cyber security code.

 

 

 President Xi is expected to express China's concern about increased U.S. engagement in the Asia-Pacific region. He also will address complaints by some Chinese businesses that Washington is creating obstacles for their investments in the United States.

 North Korea's nuclear program is expected to be high on the agenda during the two days of talks. The impoverished and isolated communist country depends heavily on China for aid and trade. Beijing maintains close ties with Pyongyang, but North Korea's belligerent rhetoric, a rocket launch and another nuclear test in the past year have strained even China's patience. President Xi has called on North Korean leaders to return to nuclear disarmament talks.

 President Obama met with the Chinese leader last year when Xi was still vice president. That meeting in the Oval Office of the White House was a more formal one.

 The Chinese leader arrives in California after official visits to Mexico, Costa Rica and Trinidad.

$500 million (about Sh800 billion) to rescue TANESCO

$500 million (about Sh800 billion) to rescue TANESCO

By Mbarouk Matata,

St.Augustine University o f Tanzania,

B.A. Economics 2013

The government has set aside $500 million (about Sh800 billion) to rescue the Tanzania Electric Supply Company Limited (TANESCO) from debt as well as improve its operations and services.

The minister for Energy and Minerals, Prof Sospeter Muhongo, told Parliament at the weekend that the government has big plans to revive the organisation to make it active in fulfilling national interests.

He said the organisation was performing poorly at the moment because of a big debt burden, poor infrastructure and lack of funds.

“We admit that the organisation is not performing well...but we have many plans to revive it and make it active again. We have already set aside $500 million to help the organisation to get to its feet again as well as implement its projects effectively,” said Prof Muhongo.

The minister was speaking during the winding-up of his ministry’s 2013/2014 budget estimates. The budget was tabled last week (May 22) but could not be endorsed after the outbreak of violence in Mtwara Region.

It was established that the violence started after the minister finished reading his ministry’s budget estimates in the House in which he insisted that the gas pipeline project linking Mtwara and Dar es Salaam would go ahead.

According to Prof Muhongo, it is not easy to revive Tanesco and improve the energy sector in the country since the process needs money and expertise.

He said his office has already requested for a $300 million (about Sh480 billion) loan from the World Bank and $200 million (about Sh320 billion) loan from the African Development Bank (AFDB).

“We have asked for this money with the aim of transforming Tanesco and change its face completely... we want the organisation to operate and provide high quality services,” said the minister.

He said the organisation’s board of directors would present its report to him in June, this year, that would explain how they want the power utility to look like as a part of the transformation.

“This process is participatory...we have involved various stakeholders. As I am speaking now, the Tanesco’s board of directors will present the report to me in June... I asked them to explain what they need and which changes should be made to transform the organisation,” said Professor Muhongo.

He said the organisation would change for the better and its services made reliable and of high quality.

 

How Do I Calculate the Inflation Rate?

By Mbarouk Matata. 25 may, 2013

BA. Economics, St. Augustine University Of Tanzania 2013

The Formula for Calculating Inflation

The formula for calculating the Inflation Rate using the Consumer Price Index (CPI) is relatively simple. Every month the Bureau of Labor Statistics (BLS) surveys thousands of prices all over the country prices and generates the current Consumer Price Index (CPI). 

 Assume for the sake of simplicity that the index consists of one item and that one item cost $1.00 in 1984. The BLS pegged the index in 1984 at 100* (see Footnote). In January of 2006 that same item would probably cost $1.98 and today it would cost even more. But let's calculate the price difference between 1984 and 2006

Step 1: Calculate How Much has the Consumer Price Index Increased?

By looking at the above example, common sense would tell us that the index increased (it went from 100 to 198).  The question is how much has it increased? To calculate the change we would take the second number (198) and subtract the first number (100). The result would be 98.  So we know that from 1984 until 2006 prices increased (Inflated) by 98 points.

But, what good does knowing that it moved 135 points do?

Well, we know that prices almost doubled in 22 years, since it was 100 and it is almost 200 but other than that we don't know much. We still need something to compare it to.

Step 2: Comparing the CPI Change to the Original CPI

Since we know the increase in the Consumer Price Index we still need to compare it to something, so we compare it to the price it started at (100). We do that by dividing the increase by the first price or 98/100. the result is (.98).

Step 3: Convert it to a Percent

This number is still not very useful so we convert it into a percent. To do that we multiply by 100 and add a % symbol.  .98 x 100= 98

So the result is a 98% increase in prices since 1984. That is interesting but (other than being the date of George Orwell's famous novel) to most people today 1984 is not particularly significant.

 Calculating the Inflation Rate Over a Specific Time Period

Normally, we want to know how much prices have increased since last year, or since we bought our house, or perhaps how much prices will increase by the time we retire or our kids go to college.

Fortunately, The method of calculating Inflation is the same, no matter what time period we desire. We just substitute a different value for the first one. So if we want to know how much prices have increased over the last 12 months (the commonly published inflation rate number) we would subtract last year's Consumer Price Index from the current index and divide by last year's number and multiply the result by 100 and add a % sign. 

The formula for calculating the Inflation Rate looks like this:

 ((B - A)/A)*100

Where "A" is the Starting number and "B" is the ending number.

So if exactly one year ago the Consumer Price Index was 178 and today the CPI is 185, then the calculations would look like this:

 ((185-178)/178)*100
or
 (7/178)*100
or
 0.0393*100 

which equals 3.93% inflation over the sample year. (Not Actual Inflation Rates).

You can always find the current consumer price index in a box on our site that looks like this:

Current Consumer Price Index (CPI-U) 232.531

Current Inflation Rate 1.06%

Released May 16, 2013 for April 2013 Provided by InflationData.com

Web Masters: Get This Widget

Note that it contains two key numbers the Current CPI Index (in the top portion) and the Current Inflation rate in the bottom half.

To calculate the Current Inflation Rate it uses the most recently released CPI data and compares it to data from exactly 12 months prior using the above formula. 

To find the CPI index on more than the current date you can check the current Consumer Inflation Rate or Historical Inflation Rates in table format. 

Shortcut to Calculating Inflation:

If you don't care about the mechanics and just want the answer, use our CPI - Inflation Calculator.  

Or if you believe a picture is worth a thousand words you may prefer just to look at the Annual Inflation Rate plotted in Chart format or Average Annual Inflation Rates by Decade.

What happens if prices Go down?

If prices go down and we experienced Price Deflation then "A" would be larger than "B" and we would end up with a negative number. So if last year the Consumer Price Index (CPI) was 189 and this year the CPI is 185 then the formula would look like this:

((185-189)/189)*100
or
 (-4/189)*100
or
-0.0211*100 

which equals negative inflation over the sample year of -2.11%. Of course negative inflation is called deflation.
  (Not Actual CPI numbers).

Calculating Inflation When it is Over 100%

 In April of 2006 the CPI index crossed the 200 mark so inflation was now over 100% so calculating it became a bit more confusing (but the formula is still the same).

Typically when the index crosses over 100% the BLS just sets a new base year making some arbitrary date now equal to 100 and adjusting all the previous dates accordingly. But so far they haven't done that yet.

 In September of 2012 the CPI index was 231.407 so if we wanted to calculate the amount of inflation from 1984 until September of 2012, we would take (231.407 - 100)/100 = 1.31407 or 131.407%. So prices inflated by 131% in that time period. The calculations are the same but we have to remember that the 131% increase is on top of the original price. 100% inflation means prices doubled. 200% inflation means prices tripled, etc. Somehow it just seems less confusing when total inflation is less than 100%.

Pomp as Uhuru is sworn in

  

Nairobi. Uhuru Kenyatta was sworn in as Kenya’s fourth president yesterday to thunderous cheers from tens of thousands of supporters, despite facing trial on charges of crimes against humanity.

“I do swear that I will be faithful and bear true allegiance to the Republic of Kenya,” said Kenyatta, the son of the country’s first president, clutching a bible as he took the oath of office.Wearing a dark suit and red tie, he also pledged to “protect and uphold, the sovereignty, integrity and dignity of the people of Kenya”.

 Officials had to appeal for quiet as 60,000 people packed into Kenya’s national football stadium chanted Kenyatta’s name and roared in support as they danced.

 William Ruto, who like Kenyatta faces trial at the International Criminal Court (ICC) for crimes against humanity related to post-election violence five years ago, took the oath of office as vice-president.“I will always truly and diligently serve the people and the Republic of Kenya in the office of the deputy president,” Ruto said.

 “I will do justice to all without fear, favour, affection and ill will,” he added. Kenyatta, one of Africa’s richest men, won the March 4 polls by more than 800,000 votes ahead of his nearest rival, outgoing Prime Minister Raila Odinga.

The 51-year-old is Kenya’s youngest president.

 Security was heavy as Kenyatta loyalists, dressed in the red colours of the winning Jubilee Coalition party, waved and military bands played tunes to welcome the new leader and bid farewell to outgoing President Mwai Kibaki, 81, retiring after more than a decade in power.

Kibaki handed over Kenya’s symbols of power -- a sword and the constitution -- to Kenyatta, with both smiling broadly and shaking hands. The handover was followed by a booming 21-gun salute.Regional leaders and foreign diplomats watched as the full to capacity stadium danced and sang along to music and a military parade.

Among the heads of state attending the ceremony were Ethiopia’s Hailemariam Desalegn, Somalia’s Hassan Sheikh Mohamud, South Sudan’s Salva Kiir, Tanzania’s Jakaya Kikwete and Uganda’s Yoweri Museveni.

Odinga, who failed in his court bid to overturn Kenyatta’s victory, did not attend.Western nations, many of which have a policy of only “essential contact” with ICC indictees, sent ambassadors to the ceremony.

Many supporters packed in buses arrived long before dawn from central Kenya and the Rift Valley, strong support bases of Kenyatta and Ruho.

“This is a great day,” 23-year-old student Martin Munyua told AFP. “People thought Uhuru could not be president but we showed them that we believe in him. This is our day to celebrate.”

“We have come to welcome our new sons to the State House,” said 35-year old high school teacher Jairus Koech, who travelled all night from the Rift Valley town of Eldoret to attend the celebrations.Odinga and civil society groups filed legal challenges alleging the March polls were marred by a series of irregularities that skewed the results.

However, Kenya’s Supreme Court last month unanimously ruled the election had been fair and credible and Odinga said he would respect the ruling.

The polls were peaceful apart from isolated incidents, avoiding a repeat of the ethnic killings and widespread violence that followed the 2007 election, when more than 1,100 people were murdered and several hundred thousand forced to flee their homes.

Local media on Tuesday warned that Kenyatta faced a tough task in uniting the country.

“Fortunately the country remained peaceful during the elections, but unfortunately many still feel disenfranchised,” The Star newspaper said in an editorial.

“A sense of national unity, patriotism, belonging and pride will only come about with a very deliberate programme to heal the septic ethnic wounds that so pollute our politics,” the Daily Nation said.

“We hope that magnanimity in victory will be reciprocated by grace in defeat.”

Both Kenyatta and Ruto, who are due to appear at the ICC later this year for their trial in The Hague, said they will cooperate fully with the court.

They deny the charges against them.Kenya, as a signatory of the Rome Statute of the ICC, would be expected to act on any arrest warrant issued by the court should the pair fail to appear for trial. (AFP)

RELIEF AS TANZANIA INFLATION FINALLY DROP TO SINGLE DIGITS

Monday, 08 April 2013 22:16  

 Dar es Salaam. The rate at which prices of goods and services increases slowed down to a 21-month low record of 9.8 per cent in March this year, the National Bureau of Statistics (NBS) announced yesterday.

 Inflation reached double-digit levels in June 2011 when it was recorded at 10.9 per cent from the May 2011 level of 9.7 per cent due to increasing prices of food, fuel and other non-food products.

 But Tanzanians may have found solace in yesterday’s announcement by the NBS director of population census and social statistics, Mr Ephraim Kwesigabo, that inflation was once again in single-digit levels, having dropped further from the February 2013 level of 10.4 per cent due to reduced food prices.

 “The decrease is mainly on account of the government’s effort to ensure that food prices are dropping,” he told journalists in Dar es Salaam.

 Analysts say a lower inflation rate pushes up the purchasing power of the local currency.

 It also helps to bring down the lending interest rates by captains and titans in the financial sector since, hoping that all other factors remain constant, the higher the inflation, the higher the interest a financial institution will charge.

 Higher inflation rates also imply huge losses to people with fixed incomes that are not inflation-adjusted as well as lenders with no inflation-adjusted interest rates – a majority of whom are those in the informal money lending markets, according to Dr Honest Ngowi, an economic analyst.

 And according to Mr Kwesigabo, the slowdown in inflation rate will enhance average return on investments in equities and improve investors’ appetite for equities.

 The drop in inflation rate augurs well for the government efforts to contain it back to single-digit levels as outlined in the 2012/2013 budget.

 The minister for Finance, Dr William Mgimwa, told The Citizen in Dar es Salaam recently that the government took the right measures and will continue to do so until inflation was contained to manageable levels before the next financial year.

 “We have done a lot to attain the 10.4 per cent in inflation rate, especially in both fiscal and monetary policies."

 "We expect that our single-digit target will be achieved before June,” Dr Mgimwa said on the sidelines of a meeting with MPs to discuss the 2013/14 budget guidelines in Dar es Salam recently.

 To control inflation, the government took several policy measures.

 In November 2011, when inflation reached 19.2 per cent, the BoT raised minimum reserve requirements on government deposits held by commercial banks from 20 per cent to 30 per cent and increased the bank rate to 12.0 per cent

 The bank rate is the basis on which the Bank of Tanzania charges interest on loans it extends to commercial financial houses and overdrafts to government.

 The BoT also announced reduction of core capital of foreign exchange dealers from 20 per cent to 10 per cent to facilitate the release of more forex into the market to strengthen the struggling shilling.

 A combination of factors including the depreciating local currency, which was changing at the lowest point of Sh1,850 per dollar, had sparked an increase in commodity prices, mainly foodstuffs, making basic necessities less affordable.

 All measures aimed at strengthening the local currency and reducing the cash supply in the market to contain inflation.

 And Mr Kwesigabo said yesterday that food and non-alcoholic beverages inflation rate has slightly decreased to 11.1 per cent in March from 12 per cent posted in February 2013.

TANZANIA 2013/2014 BUDGET

By Alawi Masare

The Citizen Reporter

Dar es Salaam. The Minister for Finance, Dr William Mgimwa, has outlined eight areas including Information and Communication Technology (ICT), ports and railways as his priorities in the next national Budget.

Other priorities in Dr Mgimwa’s Sh17.7 trillion financial plan for 2013/14 include power improvement, water, education, health and entrepreneurship services and agriculture.

Contrary to what is stipulated in the Budget Frame for 2013/14 – 2015/16, Dr Mgimwa said in Dar es Salaam yesterday that the government is expecting to collect Sh17.7 trillion for the next financial year.

On ports, the Finance minister said substantial amounts would go towards improving the Mtwara Port and initial work towards the construction of a new port at Bagamoyo.

“We also want to improve water supply, review the education system in response to findings of the recently formed education commission,” said Dr Mgimwa.

Out of the Sh17.7 trillion, Dr Mgimwa said, the government plans to spend Sh5.2 trillion, equivalent to 35 per cent, for development expenditure and Sh12.6 trillion, 65 per cent of the total budget for recurrent expenditure.

In the development expenditure, Sh2.46 trillion would come from domestic sources and Sh2.69 trillion would be sourced externally.

The central government collections are expected to be Sh10.6 trillion from both tax and non-tax revenue.

Local authorities will contribute Sh372.6 billion while grants and external loans will bring in Sh3.85 trillion.

Domestic and non-concessional loans will make available a total of Sh2.9 trillion.

In what gives the impression that donor funding is getting increasingly unreliable, Dr Mgimwa poined out that until December 2012, the country’s development partners had disbursed only 33 per cent of their total pledges.

He was, however, confident that by the end of the current financial year, much more could have been disbursed.

”Basically, it is too early to comment on the contribution of development partners to Tanzania’s Budget.

This is because the current financial year is still far from over, but as of December last year, donors had given us just 33 per cent of the total amount they had promised,” he told journalists in Dar es Salaam yesterday.

The country’s aim, he said was to reduce dependence on donors to the country’s gross domestic product by 0.5 per cent.

“It currently stands at 5.5 per cent of our GDP, but our goal is to bring it down to five per cent in the 2013/2014 budget,” he said.