{ "title": "IMF Staff Concludes Visit to Tanzania", "publication": "IMF News, December 12, 2017", "sourceUrl": "https://www.imf.org/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania", "canonical": "https://www.imf.org/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania", "overlayPath": "/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania/index.md", "summary": "Mission dates: November 30 to December 12, 2017.", "publishDate": "2017-12-12", "sections": [ { "heading": "Mission overview and timeline", "content": "- Mission dates: November 30 to December 12, 2017.\n- Team leader: Mauricio Villafuerte.\n- Purpose: Discussions on the seventh review under the Policy Support Instrument (PSI) program (approved July 16, 2014) and on macroeconomic policies and structural reforms to underpin a successor arrangement.\n- Meetings: Met with Minister Philip I. Mpango, Governor Benno Ndulu, and other senior officials of the government and the Bank of Tanzania.\n- Press release date: December 12, 2017." }, { "heading": "Growth and GDP statistics", "content": "- Preliminary data for the first half of 2017 indicate the economy grew at a still strong 6.8 percent.\n- The National Bureau of Statistics (NBS) is engaged in rebasing the GDP statistics; NBS will revisit its source data and compilation methodology and the team looks forward to the revised data to provide a clearer picture of economic growth.\n- A good harvest should help support growth, but other indicators suggest downward pressures on growth." }, { "heading": "Inflation, food supply, and monetary policy", "content": "- Headline inflation rate: 4.4 percent in November, below the monetary authorities’ medium-term target of 5 percent.\n- Drivers: Improved availability of food from the good harvest has lowered food price inflation.\n- Outlook: Broadly stable commodity prices and a prudent monetary policy stance are expected to keep inflation within the authorities’ target range.\n- Policy stance: The Bank of Tanzania has lowered minimum reserve requirements, its discount rate and stepped up liquidity injection operations.\n- Transition: Progress welcomed towards a transition to an interest-rate based monetary framework." }, { "heading": "Fiscal performance and public finances", "content": "- Overall fiscal deficit on a cash basis: 1.5 percent of GDP, lower than programmed due to delays in securing financing for projects that held back development spending.\n- Tax revenue collections in the 2016/17 budget year: slightly below the program target.\n- VAT refunds: Substantially lower-than-expected VAT refunds which were delayed by the comprehensive audit of refund claims.\n- Domestic payment arrears: Continued to increase; eliminating domestic arrears highlighted as urgent.\n- Reserves and external sector: International reserves have strengthened beyond the program target to over 5 months of import cover in the context of a sharp fall in Tanzania’s external current account deficit." }, { "heading": "Banking sector and financial vulnerabilities", "content": "- Nonperforming loans ratio: increased markedly to 12½ percent in September.\n- Banking system capitalization: System as a whole remains well-capitalized, mitigating systemic risks, but there has been a sizable reduction in capitalization ratios in some small and mid-sized banks.\n- Credit conditions: High nonperforming loans have prompted banks to curtail lending; private sector credit growth has continued to be very low despite the Bank of Tanzania’s easing measures.\n- Authorities’ actions: Team welcomed the Bank of Tanzania’s efforts to resolve some unviable banks." }, { "heading": "Key findings and risks", "content": "- Macroeconomic performance under the program has been broadly satisfactory.\n- Downward pressures on growth stem from lower-than-anticipated government spending, tax revenue collections, weak private sector credit growth and rising non-performing loans.\n- Tanzania faces significant challenges to meet its medium-term development objectives; with its population set to nearly double in the next 20 years, accelerating private sector job creation is a priority." }, { "heading": "Policy recommendations and priorities", "content": "- Enhance budget credibility.\n- Use realistic revenue projections to underpin implementable budget spending estimates.\n- Address financial sector vulnerabilities that have emerged; prioritize resolution of unviable banks and strengthening capitalization where needed.\n- Continue progress toward an interest-rate based monetary framework.\n- Improve the business environment to accelerate private sector job creation, including:\n - Policy predictability based on a strong dialogue with the private sector.\n - Regulatory reforms.\n - Timely payment of VAT and other tax refunds.\n - Eliminating domestic arrears.\n- Continue the ongoing dialogue with the private sector initiated by the ministry of finance." }, { "heading": "Discussions on a successor arrangement", "content": "- Discussions on key elements that could underpin a successor arrangement made progress.\n- The team had productive discussions on the elements of a successor arrangement and will continue the dialogue on them in the coming months.\n\nIMF Communications Department\n\n---\n\n\n References\n\n- United Republic of Tanzania and the IMF\n- Policy Support Instrument (PSI)\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania" } ], "bullets": [ "[Markdown version](/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania/index.md)", "[Structured JSON version](/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania/index.json)", "[Bundle manifest](/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania/bundle-manifest.json)", "Published: December 12, 2017", "Mission dates: November 30 to December 12, 2017.", "Team leader: Mauricio Villafuerte.", "Purpose: Discussions on the seventh review under the Policy Support Instrument (PSI) program (approved July 16, 2014) and on macroeconomic policies and structural reforms to underpin a successor arrangement.", "Meetings: Met with Minister Philip I. Mpango, Governor Benno Ndulu, and other senior officials of the government and the Bank of Tanzania.", "Press release date: December 12, 2017.", "Preliminary data for the first half of 2017 indicate the economy grew at a still strong 6.8 percent.", "The National Bureau of Statistics (NBS) is engaged in rebasing the GDP statistics; NBS will revisit its source data and compilation methodology and the team looks forward to the revised data to provide a clearer picture of economic growth.", "A good harvest should help support growth, but other indicators suggest downward pressures on growth.", "Headline inflation rate: 4.4 percent in November, below the monetary authorities’ medium-term target of 5 percent.", "Drivers: Improved availability of food from the good harvest has lowered food price inflation.", "Outlook: Broadly stable commodity prices and a prudent monetary policy stance are expected to keep inflation within the authorities’ target range.", "Policy stance: The Bank of Tanzania has lowered minimum reserve requirements, its discount rate and stepped up liquidity injection operations.", "Transition: Progress welcomed towards a transition to an interest-rate based monetary framework.", "Overall fiscal deficit on a cash basis: 1.5 percent of GDP, lower than programmed due to delays in securing financing for projects that held back development spending.", "Tax revenue collections in the 2016/17 budget year: slightly below the program target.", "VAT refunds: Substantially lower-than-expected VAT refunds which were delayed by the comprehensive audit of refund claims.", "Domestic payment arrears: Continued to increase; eliminating domestic arrears highlighted as urgent.", "Reserves and external sector: International reserves have strengthened beyond the program target to over 5 months of import cover in the context of a sharp fall in Tanzania’s external current account deficit.", "Nonperforming loans ratio: increased markedly to 12½ percent in September.", "Banking system capitalization: System as a whole remains well-capitalized, mitigating systemic risks, but there has been a sizable reduction in capitalization ratios in some small and mid-sized banks.", "Credit conditions: High nonperforming loans have prompted banks to curtail lending; private sector credit growth has continued to be very low despite the Bank of Tanzania’s easing measures.", "Authorities’ actions: Team welcomed the Bank of Tanzania’s efforts to resolve some unviable banks.", "Macroeconomic performance under the program has been broadly satisfactory.", "Downward pressures on growth stem from lower-than-anticipated government spending, tax revenue collections, weak private sector credit growth and rising non-performing loans.", "Tanzania faces significant challenges to meet its medium-term development objectives; with its population set to nearly double in the next 20 years, accelerating private sector job creation is a priority.", "Enhance budget credibility.", "Use realistic revenue projections to underpin implementable budget spending estimates.", "Address financial sector vulnerabilities that have emerged; prioritize resolution of unviable banks and strengthening capitalization where needed.", "Continue progress toward an interest-rate based monetary framework.", "Improve the business environment to accelerate private sector job creation, including:", "Continue the ongoing dialogue with the private sector initiated by the ministry of finance.", "Discussions on key elements that could underpin a successor arrangement made progress.", "The team had productive discussions on the elements of a successor arrangement and will continue the dialogue on them in the coming months.", "[United Republic of Tanzania and the IMF](http://www.imf.org/external/country/TZA/index.htm)", "[Policy Support Instrument (PSI)](https://www.imf.org/en/about/factsheets/sheets/2023/policy-support-instrument-psi)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania/index.md", "json": "/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania/index.json", "bundleManifest": "/en/news/articles/2017/12/12/pr17487-imf-staff-concludes-visit-to-tanzania/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T21:25:56.239Z" }