17 July 2014

Tanzania: Mkuya Upbeat On Curtailing Current Account Deficit

Arusha — FINANCE Minister Saada Mkuya Salum has described the country's current account deficit that stands at 14 per cent of the Gross Domestic Product (GDP) as high, but remained optimistic that the position is likely to improve with the recent gas and oil discoveries.

"The country's revenues are set to improve from sizable offshore natural gas and also oil discoveries projected to start flowing in the coming years," said the minister, adding that effective this year, the government would embark on measures to cut expenditures and improve tax revenue.

She was addressing experts and scholars from about 20 countries in the continent Ms Mkuya added that Tanzania and the rest of Africa faced major policy priorities, the foremost being the expansion and improvement of infrastructure.

"For manufacturers and traders to be able to take their products to consumers and for new technology and inputs of agriculture to reach targeted areas as well as the delivery of public utility services such as water, gas and electricity, roads, railways and public transportation facilities are needed," said the minister.

She stated that the meeting was very useful for Tanzania and the rest of Africa in shaping concrete tax policies towards the newly-found gas and oil deposits, let alone already discovered and tapped huge reserves of gold, Tanzanite, diamonds, coal, iron and steel.

"The whole world is salivating over Africa due to its promising future as the centre of economic activities and home to huge discoveries of natural resources, minerals, oil and gas yet to be tapped," said Ms Mkuya, adding that the sub- Saharan region in particular had been able to continue its solid growth path at between 5 and 7 per cent per year for the past decade.

For his part, the Tanzania Revenue Authority (TRA) Commissioner General, Mr Rished Bade, said the dialogue's main aim was to undertake major reforms in tax coordination with a view to mobilising Value Added Tax revenues and working to make VAT a simpler and more robust source of revenues for development.

His Kenyan counterpart, Mr Morris Orei of KRA, said his country was in the initial stage of the oil discovery process and thus looked forward to learning from Tanzania, which was already an old hand in mineral and other extractive industries.

The dialogue has been organised by TRA in association with the African Tax Institute, the Academy of Public Finance and the International Tax and Investment Centre who have converged here for a special African Tax Dialogue in the backdrop of new discoveries of minerals, gas and oil resources in the Sub-Saharan region.

The minister, gracing the opening session, said: "The medium-term goal is to reduce the deficit down to three per cent of GDP to meet the target of the planned five-state East African Monetary Union."

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