Dar es Salaam — The World Bank has proposed three measures for Tanzania if the country is to improve budget implementation and business environment--often cited as the major drivers of economic growth. Tanzania targetted 7.1 per cent economic growth in 2017, but the Breton Woods institution has lowered its own projection down to 6.6 per cent.
To arrive at this projection, it cited under-execution of the development budget, especially in capital projects, weak business environment and record low levels of private sector credit growth as the economy's main related challenges.
However, it quickly points out that Tanzania remains among the strongest performers in the Eastern Africa region even as its gross domestic product (GDP) softened to 6.8 per cent in the first half of 2017 compared with that of 7.7 per cent in the same period last year.
The three measures the WB proposed through its 10th Tanzania Economic Update released yesterday are paying of arrears to contractors and speeding up the VAT refund to improve cash and borrowing position of companies and enable them to repay loans and, reduce non-performing loans in the financial sector.
Domestic payment arrears remain unsustainably high, standing at around 6 per cent of GDP at the end of June 2017, according to the report.
WB also proposes the government to secure external financing through concessional terms to fund ongoing and planned capital expenditures.