PANAPRESS
Panafrican News Agency
Tanzania: IMF commends Tanzania's macroeconomic development
Dar es Salaam, Tanzania (PANA) - Tanzania's recent macroeconomic developments have continued to be favorable and growth was estimated to have been slightly over 7 percent in 2014, while inflation dropped below the country's authorities’ target of 5 percent, the International Monetary Fund (IMF) said Thursday.
Concluding a two-week mission to Tanzania, an IMF mission noted in a statement that the recent international oil price decline will provide a boost to the economy in 2015 and help contain inflation.
"The revised national accounts, which incorporate recent surveys and methodological improvements, suggest that the size of Tanzania’s economy is about 30 percent bigger than earlier thought," said Hervé Joly who led the mission, which initiated the second review under the Policy Support Instrument (PSI) programme that was approved on 16 July 2014.
In his statement, Joly pointed out that the nominal exchange rate of the Tanzanian shilling against the US dollar has depreciated, mainly reflecting the US dollar strengthening relative to most other currencies.
"The gradual depreciation contributes to maintaining the competitiveness of Tanzania’s exports and benefits farmers and other exporters," he said, noting that the recent decline in international oil prices has contained the impact of the exchange rate depreciation on import costs.
“The IMF-supported PSI programme was broadly on track through the end of 2014. Most quantitative programme targets for end-December were met; the indicative target on domestic revenue, however, was missed," Joly said..
According to the mission's observation, there has been good progress on the structural reforms supported under the PSI, although a number of measures were implemented with some delay.
The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support.
In addition, the mission pointed out that Tanzania's budget implementation for 2014/15 remains challenging because of a substantial tax and non-tax revenue shortfall and some delays in budget financing.
"These pressures were already highlighted during the first programme review and require urgent alignment of expenditure with available resources. To avoid further accumulation of expenditure arrears, it will be important to strengthen the expenditure commitment controls.
“The accumulation of payment arrears in the public sector needs to be tackled forcefully. This problem has become pervasive with large and growing government arrears to domestic suppliers and pension funds, and persistent arrears of TANESCO, the national electricity company, to its suppliers.
"It is important that the government now implements measures to settle existing arrears and prevent the recurrence of new ones by tackling their root causes," the IMF mission suggested.
In the mission's view, it is essential for preserving fiscal policy credibility that the Tanzanian budget for 2015/16 be based on realistic revenue and financing assumptions.
"A realistic budget with a moderate deficit is a key prerequisite to avoid the accumulation of new arrears and large mid-year expenditure adjustments, and also to preserve debt sustainability," said the statement.
During its 5-19 March 2015 stay in Dar es Salaam, the IMF mission met with Minister of Finance Saada Mkuya Salum, Bank of Tanzania Governor Professor Benno Ndulu, and other senior government officials.
-0- PANA AR 19Mar2015
Concluding a two-week mission to Tanzania, an IMF mission noted in a statement that the recent international oil price decline will provide a boost to the economy in 2015 and help contain inflation.
"The revised national accounts, which incorporate recent surveys and methodological improvements, suggest that the size of Tanzania’s economy is about 30 percent bigger than earlier thought," said Hervé Joly who led the mission, which initiated the second review under the Policy Support Instrument (PSI) programme that was approved on 16 July 2014.
In his statement, Joly pointed out that the nominal exchange rate of the Tanzanian shilling against the US dollar has depreciated, mainly reflecting the US dollar strengthening relative to most other currencies.
"The gradual depreciation contributes to maintaining the competitiveness of Tanzania’s exports and benefits farmers and other exporters," he said, noting that the recent decline in international oil prices has contained the impact of the exchange rate depreciation on import costs.
“The IMF-supported PSI programme was broadly on track through the end of 2014. Most quantitative programme targets for end-December were met; the indicative target on domestic revenue, however, was missed," Joly said..
According to the mission's observation, there has been good progress on the structural reforms supported under the PSI, although a number of measures were implemented with some delay.
The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support.
In addition, the mission pointed out that Tanzania's budget implementation for 2014/15 remains challenging because of a substantial tax and non-tax revenue shortfall and some delays in budget financing.
"These pressures were already highlighted during the first programme review and require urgent alignment of expenditure with available resources. To avoid further accumulation of expenditure arrears, it will be important to strengthen the expenditure commitment controls.
“The accumulation of payment arrears in the public sector needs to be tackled forcefully. This problem has become pervasive with large and growing government arrears to domestic suppliers and pension funds, and persistent arrears of TANESCO, the national electricity company, to its suppliers.
"It is important that the government now implements measures to settle existing arrears and prevent the recurrence of new ones by tackling their root causes," the IMF mission suggested.
In the mission's view, it is essential for preserving fiscal policy credibility that the Tanzanian budget for 2015/16 be based on realistic revenue and financing assumptions.
"A realistic budget with a moderate deficit is a key prerequisite to avoid the accumulation of new arrears and large mid-year expenditure adjustments, and also to preserve debt sustainability," said the statement.
During its 5-19 March 2015 stay in Dar es Salaam, the IMF mission met with Minister of Finance Saada Mkuya Salum, Bank of Tanzania Governor Professor Benno Ndulu, and other senior government officials.
-0- PANA AR 19Mar2015
