Tanzania Macroeconomic Performances Remain Strong, IMF Indicate
The fourth review of the
International Monetary Fund (IMF) program in Tanzania concluded that the
country’s macroeconomic performances remain strong. The conclusion was made by
the Executive Board of the IMF on July 18th 2016 after the review of the Policy
Support Instrument (PSI) for Tanzania. The PSI helps low-income countries to
design effective economic plans that once approved by the IMF, are addressed to
international donors, multilateral development banks, and foreign markets.
“Tanzania’s macroeconomic performance has been strong under the PSI. Growth has
remained close to 7% and inflation is moderate. Most quantitative program
targets for end-2015 were met […],” said Mr. Min Zhu, IMF’s Deputy Managing
Director and Acting Chair. The favorable macroeconomic outlook is supported by
Tanzania’s development agenda. However, the country’s authorities need to
ensure that spending does not exceed available resources. For this, careful
prioritization and implementation of expenditures under the 2016–2017 budget of
Tanzania will be required, according to Min Zhu. “Vigorous reforms will be
required to foster further structural transformation of the economy. The
authorities’ focus on creating a better environment for business and job
creation is welcome […]. Improving the financial sustainability of the public
electricity utility, TANESCO, is critical for the development of the
[Tanzanian] energy sector. Tanzania could also benefit from the completion of
the East African Community common market,” he added. Tanzania Macroeconomic
Performances Tanzania’s GDP grew by 7% in 2015, with activity particularly
strong in the construction, communication, finance, and transportation sectors,
the IMF press release indicates. Inflation in Tanzania remained in single
digits throughout 2015, averaging 5.6%, close to the authorities’ target of 5%.
The current account deficit declined from 10.7% of GDP in 2013–2014 to a
projected 8.6% in 2015–2016, mainly due to lower oil prices. The banking system
appears sound overall, but there is wide variation within the system, according
to the IMF.
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