(Ecofin Agency) - Supported by prudent monetary and fiscal policies, Tanzania's economic situation remains stable with sustained economic growth, relatively contained inflation, adequate levels of foreign exchange reserves and bearable public debt. This was one of the main findings of the International Monetary Fund (IMF) staff mission to the country from 20 February to 4 March 2020.
According to the institution, “the pace of economic activity appears to have increased in recent months prompted by higher public investment, a rebound in exports, and an increase in credit to the private sector.” As a result, real GDP growth is estimated at close to 6%, with sustained activity in the construction and mining sectors. Other economic indicators point to a favorable economic environment, with annual inflation at 3.7%, a stable exchange rate, foreign exchange reserves equivalent to almost 5 months of imports and public debt below 40% of GDP.
However, in the period ahead, a set of strong and decisive policies will be essential to increase private sector investment, job creation, sustain high economic growth and increase resilience to risks, the IMF said.
In this regard, the institution recommends that the Tanzanian authorities undertake, among other things, a series of tax reforms necessary to improve the business climate and increase public revenues. But also to accelerate the implementation of reforms in the business environment while working to strengthen the skills of human capital. Moreover, policies will be needed to improve the quality and timeliness of the country's economic activity indicators.
According to IMF projections, Tanzania's economic GDP growth is expected to reach 5.7% in 2020.