IMF Staff Completes 2020 Article IV Mission to Tanzania
IMF News, March 5, 2020
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- Published: March 5, 2020
Mission overview and macroeconomic snapshot
- Mission dates: February 20 to March 4, 2020.
- Press release date: March 5, 2020.
- Key macroeconomic conditions (staff estimates):
- Real GDP growth: about 6 percent; staff also states "close to 6 percent."
- Annual inflation: 3.7 percent; described elsewhere as "under 5 percent."
- Foreign exchange reserves: equivalent to near 5 months of imports.
- Public debt: below 40 percent of GDP.
- IMF Executive Board timing: The IMF Executive Board is expected to discuss the 2020 Article IV Consultation report by May 2020.
Main findings from the mission
- Recent drivers of activity:
- Increased public investment, a rebound in exports, and an increase in credit to the private sector have prompted an increase in the pace of economic activity.
- Activity is buoyant in the construction and mining sectors.
- Overall assessment:
- Prudent fiscal and monetary policies have delivered economic stability.
- The economic environment is described as benign with stable exchange rate conditions and manageable public debt.
- Data and transparency:
- Authorities committed 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 improvements in fiscal accounts.
Policy priorities and recommendations
- Tax policy and administration:
- Implement tax reforms to improve the business climate and increase government revenues.
- Improve governance in tax administration and adhere to efficient means of tax collection and control, notably through use of risk-based audits.
- Expand the number of taxpayers and improve tax administration and compliance in line with established protocols and regulations.
- Conduct a comprehensive review and further rationalization of tax exemptions, particularly income tax incentives.
- Government spending and arrears:
- Implement planned measures to clear the backlog of expenditure arrears, account for them on a timely basis, and prevent the accumulation of new ones.
- Increase spending on health and education in coming years while ensuring quality of services and addressing key infrastructure gaps.
- Design and prioritize such expenditures carefully to maximize social and growth benefits.
- Financial sector and credit access:
- Proceed with measures to further reduce non-performing loans and improve banking supervision to protect banks’ soundness.
- Lower borrowing costs and improve access to credit by broadening the pool of acceptable collateral, improving the framework for credit information, and tackling judicial bottlenecks for recovery of unpaid loans.
- Business climate and labor skills:
- Accelerate implementation of the Blueprint for Regulatory Reforms, starting with publication of the action plan including a timetable and delineation of responsibilities.
- Rationalize agencies, licenses, and permits; remove nontariff barriers to trade.
- Strengthen regular dialogue with the private sector, invest in education, expand training and vocational programs, and adopt a more flexible and expeditious system of visa/work permits for specialized foreign workers.
- Governance:
- Continue and publicize anti-corruption stance and actions to enhance attractiveness for investing and producing in Tanzania.
Engagement and acknowledgments
- The IMF team was led by Mr. Enrique Gelbard.
- Meetings held with: Hon. Dr. Philip Mpango, Minister of Finance and Planning; Professor Florens Luoga, Governor of the Bank of Tanzania; other senior government officials; representatives of the business and banking sectors; and development partners.
- Statement emphasis: A robust and decisive set of policies will be critical to increase private sector investment, job creation, support high economic growth, and increase resilience against risks.
Press Release No. 20/81 — International Monetary Fund, March 5, 2020.