IMF: Dar's economy on the right path

The International Monetary Fund has commended Tanzania’s government for maintaining robust growth in the economy and lowering of inflation to a single digit.

The IMF Deputy Managing Director Mr. David Lipton said in a statement released in Dar es Salaam that Tanzania’s government strengthening macroeconomic stability and fundamental fiscal policies that led to the strong growth in the economy.

“The Tanzanian economy has continued to grow at a robust pace and the recent decline in inflation is welcome. The authorities are to be commended for their commitment to policies aimed at containing demand pressures, strengthening macroeconomic stability, and preserving a sound fiscal position,” he said in the statement released after a conclusion of the sixth and final review under the policy support instrument for Tanzania and the second review under Standby Credit Facility Arrangement.

According to the statement the IMF’s Executive Board approved the 18-month SCF arrangement for Tanzania in July 2012 in an amount equivalent to SDR 149.175 million (about US$228 million). The PSI for Tanzania was approved by the Executive Board on June 4, 2010.

The IMF hailed the government and the Bank of Tanzania for measures applied in containing inflation that has of lately maintained its downward trend. “The planned moderate tightening of monetary policy in 2013 will support gradual disinflation.

The Bank of Tanzania’s (BoT) commitment to take additional measures in the event of a reemergence of inflationary pressures is welcome. 

Mr Lipton said looking ahead, it would be appropriate for the BoT to complement the reserve money targeting framework with a more flexible approach to policymaking that gives a greater role to the policy interest rate.

Greater exchange rate flexibility could play a useful role in the event of renewed pressures on the exchange rate, he said. “The deficit target equivalent to 5 percent of GDP in the fiscal year 2013/14 is consistent with the medium-term objectives of fiscal consolidation and debt stabilization.

By undertaking new revenue measures, the authorities have appropriately sought to preserve critical infrastructure and social spending,” he said. 

He said government’s commitment to reducing non-priority spending in the event of revenue shortfalls was welcome, as well as their commitment to dealing with domestic arrears and to addressing the financial difficulties of the power sector in a transparent manner.

“A priority in the months ahead will be to step up the implementation of structural reforms, particularly in modernizing the VAT regime, strengthening debt management capacity, and establishing a sound institutional and legal framework to ensure that possible future revenues from newly discovered gas deposits accrue to the benefit of all citizens.”
Source: The Daily News, reported form Dar es Salaam
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