IMF says Tan­za­nia eco­nomic per­for­mance re­mains strong

The Pak Banker - - COMPANIES/BOSS -

A team from the In­ter­na­tional Mone­tary Fund (IMF), led by Hervé Joly, vis­ited Tan­za­nia from March 10-23, 2016. The mis­sion ini­ti­ated the fourth re­view un­der the Pol­icy Sup­port In­stru­ment (PSI) pro­gram that was ap­proved on July 16, 2014.[1] also held dis­cus­sions with the au­thor­i­ties on the 2016 Ar­ti­cle IV Con­sul­ta­tion. Mr. Joly on the oc­ca­sion said, "Eco­nomic per­for­mance has re­mained strong. Pre­lim­i­nary es­ti­mates sug­gest that GDP grew by 7 per­cent in 2015, with ac­tiv­ity par­tic­u­larly buoy­ant in the con­struc­tion, com­mu­ni­ca­tion, finance, and trans­porta­tion sec­tors. Eco­nomic growth is ex­pected to re­main close to 7 per­cent in 2016. In­fla­tion re­mained in sin­gle dig­its through­out 2015, av­er­ag­ing 5.6 per­cent, de­spite the sig­nif­i­cant ex­change rate de­pre­ci­a­tion in the first half of the year. The tight­en­ing of mone­tary pol­icy in May 2015 and the de­cline in global com­mod­ity prices, es­pe­cially oil prices, helped keep in­fla­tion at mod­er­ate lev­els. In­fla­tion is ex­pected to de­crease fur­ther in the com­ing months, re­main­ing close to the au­thor­i­ties' medium-term tar­get of 5 per­cent.

The Ar­ti­cle IV dis­cus­sions fo­cused on how to sus­tain high growth and im­ple­ment the new gov­ern­ment's pri­or­i­ties while pre­serv­ing fis­cal sus­tain­abil­ity. Vig­or­ous re­forms will be needed to fos­ter fur­ther struc­tural trans­for­ma­tion of the econ­omy and sus­tain high pro­duc­tiv­ity gains and in­vest­ment.

There was a broad con­ver­gence of views on the pri­or­ity re­form ar­eas and on the key role of the gov­ern­ment in fa­cil­i­tat­ing pri­vate sec­tor-led growth. Mod­ern­iz­ing agri­cul­ture, which em­ploys a large share of the pop­u­la­tion, would raise ru­ral in­comes and con­trib­ute to poverty re­duc­tion. It would also free la­bor re­sources for other sec­tors of the econ­omy and could fos­ter the devel­op­ment of cer­tain in­dus­tries, such as food pro­cess­ing. Im­prov­ing the busi­ness en­vi­ron­ment is also a pri­or­ity; this in­cludes, among oth­ers, bet­ter en­ergy and trans­porta­tion in­fra­struc­ture and im­prov­ing ac­cess to land and finance. Fur­ther im­prov­ing the fi­nan­cial sus­tain­abil­ity of the pub­lic elec­tric­ity util­ity, TANESCO, and set­tling out­stand­ing ar­rears on gas and elec­tric­ity sup­plies are crit­i­cal to fa­cil­i­tat­ing con­tin­ued pri­vate sec­tor in­vest­ment in en­ergy. Tan­za­nia could sig­nif­i­cantly ben­e­fit from the com­ple­tion of the East African Com­mu­nity (EAC) com­mon mar­ket, which would help at­tract cap­i­tal and fos­ter com­pe­ti­tion and ef­fi­ciency. The mis­sion wel­comed the ef­forts be­ing made by the au­thor­i­ties in their strong drive against cor­rup­tion, not­ing that it would help ad­dress the per­cep­tion that gover­nance had de­te­ri­o­rated in re­cent years, as sug­gested by a num­ber of sur­veys.

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