22 January 2017

Africa: Local Economy Impresses IMF

Photo: The Citizen
President John Magufuli at the processing factory in the outskirts of Dar es Salaam.

The International Monetary Fund (IMF) Resident Representative in Tanzania, Mr Bhaswar Mukhopadhyay, said yesterday that his organisation is satisfied with the speed of Tanzania's economic growth and that the country is among the fast growing economies in Africa.

Mr Mukhopadhway said IMF expects to witness economic growth in the coming years in collaboration with private sectors in the country. The IMF boss explained his organisation's satisfaction to the Minister of Finance and Planning, Dr Philip Mpango, when he paid a visit to the ministry. He said Tanzania has successfully managed to strengthen tax collection systems, control inflation, wage a war against corruption and implement the government budget.

On his part, Dr Mpango said the country's economic growth depends much on private sectors. He said strong private companies contribute to the country's economy through establishment of investments and paying of taxes.

"It is quite clear that the private sector plays a big role in the country's economic growth. A strong private sector helps the government to get revenues through taxes and offers employment to Tanzanians through established investments in the country," said Dr Mpango.

He said the government recognises and value the contribution of private sector to the country's economic growth. He said the Fifth Phase Government is optimistic to strengthen the relationship with the private sector so as to realise the revival, establishment and development of industries.

"We are doing everything in our power to ensure we build and develop industries in the country. This will be successful through strong cooperation with the private sector," he said. Last week the IMF's Executive Board completed the fifth review of Tanzania's economic performance, noting that Tanzania's macroeconomic performance remains strong.

The review also indicates that the economic growth was robust during the first half of 2016 and is projected to remain at about 7 per cent this fiscal year. "Inflation came down below the authorities' target of 5 per cent and is expected to remain close to the target, while the external current account deficit was revised down on account of lower imports of capital goods," noted the review report. The review is under the programme supported by a three-year Policy Support Instrument (PSI).

In completing the review, the board also granted waivers for the non-observance of the June 2016 assessment criteria on the overall fiscal deficit and the non-accumulation of domestic expenditure arrears on the grounds that the slippages were minor. The PSI for Tanzania was approved by the board on July 16, 2014.

The review, nevertheless, noted that there were risks that could adversely affect economic growth going forward. The risks arise from the currently tight stance of macroeconomic policies, the slow pace of credit growth that may become protracted, slow implementation of public investment and private sector uncertainty about the government's new economic strategies.

However, local economists challenged the IMF warning saying the body's analysis did not consider other factors that boost economic growth in the country.

University of Dar es Salaam (UDSM) Economic Professor, Haji Semboja, said the problem was not with microeconomic policies, but instead the government needs to come up with proper formulation and implementation of policies in key sectors.

He said Tanzania's economy stands on various sectors and that there is need to implement available policies, laws and regulation to enable them contribute to the national economy.

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