Tanzania’s economic growth in 2019 is estimated at close to 6%, the International Monetary Fund said on Thursday, driven by “buoyant” activity in the construction and mining sectors.
“The pace of economic activity appears to have increased in recent months prompted by higher public investment, a rebound in exports, and an increase in credit to the private sector,” the IMF said in a statement.
“Prudent fiscal and monetary policies have delivered economic stability,” it added.
Furthermore, to sustain these gains the IMF Staff monitoring Team recommended an increase in private investment, and creation of jobs, as there is a pressing need to proceed with targeted economic reforms.
“First, tax reforms are needed to improve the business climate and increase government revenues. The mission team commended the authorities for their intention to improve governance in tax administration and emphasized the urgency to adhere to efficient means of tax collection and control, notably through the use of risk-based audits. This will ensure better compliance and timely payment of tax refunds and improve companies’ cash flows. Although a comprehensive review of tax exemptions and their further rationalization (particularly of income tax incentives) is also needed, there is a significant and immediate revenue potential from the expansion in the number of taxpayers together with improvements in tax administration and compliance in line with established protocols and regulations.
“Second, regarding government spending, the implementation of planned measures to clear the backlog of expenditure arrears, account for them on a timely basis, and prevent the accumulation of new ones will be essential to improve businesses’ cash flows, ensure that bank loans are paid back on time, and sustain economic activity. In addition, spending on health and education will need to be scaled up in coming years while ensuring quality of education and medical services and addressing key infrastructure gaps. Such expenditures will need to be carefully designed and prioritized in order to reap potential benefits in terms of better social conditions and high rates of economic growth.
The team led by Mr. Enrique Gelbard, concluded the consultations by thanking Tanzanian authorities’ commitment to take steps to improve the quality and timeliness of indicators of economic activity and of GDP (through improvements in economic surveys and publication of high-frequency indicators and surveys’ results) as well as of the fiscal accounts.?