The International Monetary Fund (IMF) has urged Tanzania to speed up reforms and spend more in order to prevent a slowdown of its economy.
A team from the IMF, led by Mauricio Villafuerte, has been on a visit to the East African country from November 30 to December 12, 2017, during which it held discussions with various government agencies.
“Preliminary data for the first half of 2017 released by the authorities indicate that the economy grew at a still strong 6.8 percent. A good harvest should help support growth, but other macroeconomic indicators—lower-than-anticipated government spending and tax revenue collections, weak private sector credit growth and rising non-performing loans—suggest that there are downward pressures on growth,” the team said upon completion of the visit.
President John Magufuli pledged to reform the country’s economy which has been dogged by corruption, and begin a programme to develop public infrastructure after he was elected in 2015.
“Improvements in the business environment – policy predictability based on a strong dialogue with the private sector, regulatory reforms, timely payment of value-added tax (VAT) and other tax refunds, and eliminating domestic arrears — must be pursued with urgency,” the IMF said late on Tuesday.
Tanzania’s GDP growth slowed to 6.8 per cent in the first half of 2017 from a 7.7 per cent expansion in the same period a year ago.
The IMF team said it also held discussions with Tanzanian authorities on how they could address the current economic challenges.
“The IMF staff team held discussions on how to address current macroeconomic challenges. It noted the importance of enhancing budget credibility. It emphasized the importance of realistic revenue projections to underpin implementable budget spending estimates,” it said.
In June, the IMF said Tanzania may have to delay implementing some of its infrastructure projects because its revenue expectations for 2017/18 may not be achieved.
In a bid to profit from its long coastline, Tanzania wants to spend $14.2 billion over the next five years to build a 2,561 km-railway network – part of plans that also include upgrading ports and roads to serve growing economies in the region.
The IMF said subdued government revenue collection and delays in securing financing for projects have held back development spending and hurt economic growth.