Statement by IMF Deputy Managing Director Murilo Portugal at the Conclusion of a Visit to Tanzania

Press Release No.07/83
May 1, 2007

International Monetary Fund (IMF) Deputy Managing Director Murilo Portugal made the following statement in Dar es Salaam today:

"I am delighted to have had the opportunity to visit Tanzania, my first trip to Africa since I joined the IMF last December.

"It has been a fruitful visit that, while short, has covered a lot of ground. I had the opportunity to meet with His Excellency President Jakaya Kikwete and his economic team, including Finance Minister Zakia Meghji, Central Bank Governor Daudi Ballali, and other senior officials. Separately, I met with parliamentarians and representatives of the donor community. I participated in a roundtable discussion with civil society representatives and business leaders. And I was also able to see the fine work being done at the Dogodogo Street Children's Trust in helping street children attend school.

"In my meeting with President Kikwete, I commended Tanzania's economic performance. In the past few years, it has achieved strong growth and low inflation through sound macroeconomic policies. The external position has strengthened in recent years, and debt relief has reduced Tanzania's external debt burden.

"We also discussed the next phase of Tanzania's relationship with the IMF—through the Policy Support Instrument (PSI). The PSI is an acknowledgement of Tanzania's strong record of macroeconomic performance and that the essential economic policy-making capacity is in place. Moreover, Tanzania no longer needs financial support from the IMF. This is quite an achievement. The role of the Fund in this phase is to continue supporting Tanzania's development of a sound macroeconomic policy framework and to encourage reforms in areas that are critical to securing higher and more sustainable growth. The Fund's periodic assessment of these efforts may be used by private investors, the donor community and others to make judgments about progress being made.

"I expressed the Fund's strong support for the overall direction of the policies being pursued, but noted that much remains to be done for Tanzania to make greater inroads in reducing poverty and raising living standards. In our discussions, we agreed that the main challenge now for Tanzania is to seize the opportunity provided by macroeconomic stability and debt relief and to sustain, and indeed deepen, the progress achieved in recent years. Of particular importance in this respect is the need to create a business environment that is more conducive to private investment. This means removing bottle-necks that prevent the efficient operation of the private sector; upgrading infrastructure—electricity, transportation networks; and simplifying business regulation. Further structural reforms, including in the areas of governance, tax administration and financial sector reform, are also critical to support macroeconomic stability and growth.

"My visit to Tanzania has left me with the strong impression that with sustained implementation of its economic reforms, Tanzania can succeed in achieving its ambitious development goals. I am equally encouraged by the determination and commitment of the President and his economic team to build on Tanzania's economic record, and to move ahead with their reform agenda. The IMF has been—and will continue to be—a strong supporter of the government in their efforts to make progress toward the Millennium Development Goals. In this regard, I also emphasized the importance of the developed world to deliver on their commitments on bilateral aid as well as for improved market access for African countries and expanded trade.

"I also met with nearly 30 IMF resident representatives stationed in sub-Saharan Africa to discuss with them how best to implement the Fund's commitment to the region. In particular, we addressed key priorities that will guide our work going forward—financial sector development, public financial management, enhancing trade opportunities, and capacity building.

"In addition, I visited the East African Regional Technical Assistance Center (AFRITAC) here in Dar Es Salaam1. Through its regional technical assistance centers, the Fund contributes to building domestic capacity and the needed stock of know-how in areas where we have comparative advantages: the design of macroeconomic policies, financial sector development and strengthening, revenue policy and administration, public financial management, public debt management, and macroeconomic statistics. I am deeply convinced that strong human and institutional capacity is both a precondition for economic development and an "insurance policy" in cases of external shocks.

"Indeed, Tanzania, as the host of East African center, the first of the regional technical assistance centers in Africa, serves as a good example. Since its establishment, East AFRITAC has been assisting the government of Tanzania in building capacity in the areas of public financial management, revenue administration, and monetary and banking operations. To mention a specific example, efforts to strengthen the tax revenue authority and the large taxpayers department have resulted in an impressive increase in revenue collections over the past two years. More generally, continued improvement of government operations is a major component of the overall poverty reduction strategy."


1 The East AFRITAC, opened in Dar es Salaam, Tanzania, in 2002, now serves seven countries in East Africa (Eritrea, Ethiopia, Kenya, Malawi, Rwanda, Tanzania, and Uganda). The West AFRITAC was opened in Bamako, Mali, in 2003, to serve 10 countries in West Africa (Benin, Burkina Faso, Côte d' Ivoire, Guinea-Bissau, Guinea, Mali, Mauritania, Niger, Senegal, and Togo). Most recently, the Central AFRITAC was opened in Libreville, Gabon, in 2007. The AFRITACs are financed by contributions from 24 donor partners, the IMF, as well as by in-kind contributions by host governments.



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