US shutdown sparks worries in Dar

Implementation of some US funded projects in the country risks delay due to Washington DC government shutdown on Tuesday.

The shutdown came after the US Congress failed to pass the spending bill and its magnitude depend heavily on how long it will last.

The last shutdown was 18 years ago during Bill Clinton administration. Most economists interviewed in Dar es Salaam yesterday said Tanzania, being one of the beneficiaries of America-funded programmes, was bound to suffer if the US government shutdown is prolonged.

Tanzania is one of the recipients under the Millennium Challenge Corporation’s (MCC) Millennium Challenge Account, Power Africa and Trade Africa initiatives as well as HIV/Aids programmes.

Confederation of Tanzania Industries (CTI) Director of Policy and Research Hussein Kamote told the 'Daily News' yesterday that the impact of the shutdown was not only for Tanzania but also for the rest of the region.

“The MCC is coming to its end in 2015 and we (Tanzania) expect to sign a better agreement in monetary terms in the second phase,” Mr Kamote said, noting: “So, if the US financial plan touches those areas, it’s a blow to the nation.”

He said the US provide HIV/Aids counselling teaching programmes and fund to purchase ARVs and that any delay or budget cut will affect efforts to drive back the scourge. 

An economic senior lecturer with the Open University of Tanzania, Dr Hildebrand Shayo said investors who toured the country with President Obama three months ago might rethink on their investment plans following the budget crisis.

“The shutdown will slow the implementation of their plans because they depend on the budget to start planning their borrowing from banks or stock exchanges,” Dr Shayo said, adding: “…I believe this has been put on hold until the spending bill is passed.”

Dr Shayo said investors like Symbion and projects like Power Africa initiative and African Growth and Opportunity Act are likely to suffer. 

The US, through the MCC, signed a five-year deal of 700 million US dollars with Tanzania, with its implementation set to end 2015.

Finance and Economic Affairs William Mgimwa and Bank of Tanzania governor Benno Ndulu were not available for comment yesterday. 

According to CNN website, most US economists agree, however, that the economic impact of the government shutdown depends greatly on how long the shutdown lasts.

But, some estimates show that the shutdown could cost the still-struggling US economy roughly one billion US dollars a week just in pay lost by furloughed federal workers. 

"If it's a relatively short shutdown, it's a minor headache," said Brian Kessler, economist with Moody's Analytics:

"But if it lasts several weeks, the people affected start to act like they're unemployed. They delay larger purchases. That's why you start to see a significantly greater effect the longer it goes."
Source: Daily News, reported by Abduel Elinaza from Dar es Salaam, Tanzania
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