Under the Policy Support Instrument which is designed for countries that do not need balance of payments financial support, IMF Executive Board Completes the Fifth Review of Tanzania’s economic performance under the program supported by a three-year PSI. The review indicates a great economic performance of the Tanzania economy during the first half of 2016 and is projected to remain at about 7 percent this fiscal year.
Program performance was largely satisfactory and most assessment criteria for June 2016 and all indicative targets for September 2016 were met. However, there are risks that could adversely affect economic growth. This includes the currently tight stance of macroeconomic policies, the slow pace of credit growth, slow implementation of public investment, and private sector uncertainty about the government’s new economic strategies. On the positive, as corruption seems chronic in many African nations and hurting development, authorities in Tanzania are acting on tax evasion and fighting corruption which led to higher fiscal revenues. If this act is furthered, it will provide a good foundation for the anticipated scaling up of infrastructure investment with the 2016/17 budget.
The review indicate that monetary policy should be eased to address the tight liquidity situation and support credit to the private sector to facilitate a stabilized economic growth. In that regards, the authorities have recently stepped up efforts to advance reforms with measures taken to strengthen public financial and debt management, modernize the monetary policy framework, and improve monitoring of parastatal enterprises. Additionally, responsible departments are implementing an ambitious development and reform agenda over the medium term, as described in their recently-released second Five-Year Development Plan.
In completing the review, the Board also granted waivers for the non-observance of the end-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.