IMF sees slower growth, high inflation in Tanzania

[nngu007]

Fri Mar 11, 2011 8:01am GMT






DAR ES SALAAM (Reuters) - Tanzania's economy will grow at a slower rate than previously expected this year, weighed down by a power crisis and rising prices, and accelerating inflation is a concern, the International Monetary Fund (IMF) said on Friday.
The IMF's resident representative also said the fund backs Tanzania's plans to issue a debut Eurobond this fiscal year and had agreed to an external non-concessional borrowing ceiling of $1.5 billion over three years.
The IMF initially expected Tanzania's economy to grow 7.2 percent this year from 7 percent in 2010 before accelerating to 7.5 percent in 2012, while inflation would be 5.5 percent by June 2011, and decline to 5 percent thereafter.
But sections of Tanzania, like its northern neighbour Kenya, are suffering from drought, which has hurt food production and cut water levels at the country's main hydropower dams.
"The ongoing drought, the related power shortages, and the global rise in food and fuel prices all mean these forecasts must be reconsidered," resident representative John Wakeman-Linn told Reuters.
"Clearly these factors will increase Tanzania's inflation in 2011, while reducing its growth somewhat."
Inflation rose for the third successive month in January to 6.4 percent from 5.6 percent in December.
The IMF said it was working with Tanzania's central bank and finance ministry to revise the 2011 GDP and inflation projections.
Wakeman-Linn said Tanzania's economy could rebound next year if the country addressed chronic energy shortages that have forced the state-run Tanzania Electric Supply Company to introduce nationwide rolling blackouts since December.
Tanzania, Africa's fourth-biggest gold producer, mainly depends on tourism, mining and agriculture and is increasingly attracting more investor interest in telecommunications, energy, manufacturing, financial services and transport.
POWER WOES
"Beyond 2011, assuming the power problem is resolved satisfactorily, there is no reason Tanzania should not return to its previous growth path of 7 percent or more," he said.
"Communications, financial services, mining and tourism should continue to do well. Manufacturing was doing very well prior to the power problems, and can be expected to continue to do well once the problems are resolved. The prospects for agriculture depend on the weather."
The IMF said it approved of plans by Tanzania to issue a Eurobond in the fiscal year starting in July, after the country gets a sovereign rating in the next seven to eight months.
"It makes perfect sense for Tanzania to borrow on international capital markets, provided they borrow on reasonable terms and spend the money wisely on well-designed, critical infrastructure projects," Wakeman-Linn said.
The country hopes to get a credit rating of B+, similar to other African nations such as Kenya, Angola and Nigeria.
Investment Climate Facility for Africa -- a private body working to improve the business climate in the continent -- estimates Tanzania needs to invest $10 billion a year to improve its infrastructure network.
"Over time, Tanzania needs to find sustainable ways to finance and address its huge infrastructure needs," Wakeman-Linn said.

 

[Societa Jesuit]

Fri Mar 11, 2011 8:01am GMT






DAR ES SALAAM (Reuters) - Tanzania's economy will grow at a slower rate than previously expected this year, weighed down by a power crisis and rising prices, and accelerating inflation is a concern, the International Monetary Fund (IMF) said on Friday.
The IMF's resident representative also said the fund backs Tanzania's plans to issue a debut Eurobond this fiscal year and had agreed to an external non-concessional borrowing ceiling of $1.5 billion over three years.
The IMF initially expected Tanzania's economy to grow 7.2 percent this year from 7 percent in 2010 before accelerating to 7.5 percent in 2012, while inflation would be 5.5 percent by June 2011, and decline to 5 percent thereafter.
But sections of Tanzania, like its northern neighbour Kenya, are suffering from drought, which has hurt food production and cut water levels at the country's main hydropower dams.
"The ongoing drought, the related power shortages, and the global rise in food and fuel prices all mean these forecasts must be reconsidered," resident representative John Wakeman-Linn told Reuters.
"Clearly these factors will increase Tanzania's inflation in 2011, while reducing its growth somewhat."
Inflation rose for the third successive month in January to 6.4 percent from 5.6 percent in December.
The IMF said it was working with Tanzania's central bank and finance ministry to revise the 2011 GDP and inflation projections.
Wakeman-Linn said Tanzania's economy could rebound next year if the country addressed chronic energy shortages that have forced the state-run Tanzania Electric Supply Company to introduce nationwide rolling blackouts since December.
Tanzania, Africa's fourth-biggest gold producer, mainly depends on tourism, mining and agriculture and is increasingly attracting more investor interest in telecommunications, energy, manufacturing, financial services and transport.
POWER WOES
"Beyond 2011, assuming the power problem is resolved satisfactorily, there is no reason Tanzania should not return to its previous growth path of 7 percent or more," he said.
"Communications, financial services, mining and tourism should continue to do well. Manufacturing was doing very well prior to the power problems, and can be expected to continue to do well once the problems are resolved. The prospects for agriculture depend on the weather."
The IMF said it approved of plans by Tanzania to issue a Eurobond in the fiscal year starting in July, after the country gets a sovereign rating in the next seven to eight months.
"It makes perfect sense for Tanzania to borrow on international capital markets, provided they borrow on reasonable terms and spend the money wisely on well-designed, critical infrastructure projects," Wakeman-Linn said.
The country hopes to get a credit rating of B+, similar to other African nations such as Kenya, Angola and Nigeria.
Investment Climate Facility for Africa -- a private body working to improve the business climate in the continent -- estimates Tanzania needs to invest $10 billion a year to improve its infrastructure network.
"Over time, Tanzania needs to find sustainable ways to finance and address its huge infrastructure needs," Wakeman-Linn said.

Asante kwa ''good post'' ingawa wengine hawataisoma.......but huu ndiyo ukweli kwenye reds ndipo dowans walipotuangamiza wote katika nchi hii na katika browns utaona haohao ndiyo watakaochukua hizo sustanable ways ili watuangamize kabisa kama waliposema mwanzo watapatia uvumbuzi wa kudumu wa miundo mbinu ya nishati yaani umeme.

I was born with it and not without it.

 

[Mbaha]

Hivi hayo ndo maisha bora kwa kila mtanzania????? Kupiga hatua mbili mbele.. halafu hatua tatu nyuma????

 

[nngu007]

We do have the right to blame our country administration; but the administration always concetrating on hating creating divisions among the population creating classes

Other nations which have true democracy the ruling party would not be in power with this kind of Economic Flows

 

[nngu007]

Yeah it is painful that not many will be interested with this article as most of us we are more into political rather than political and economical constructive discussion to uplift our people and the nation as well.

 

[Eric Cartman]

Hawa jamaa nao mbona wanatakutuletea hadithi zao na kuacha sababu za uzembe within the gov. Mbona amna mention ya adhabu ya import mtanzania anayoipata kutokana uwagizaji wa bidhaa nyingi au kwa sababu ni sera ambazo wanazi promote wao.

How is inflation supposed to be controlled iwapo tanzania inazembea kwenye 'secondary prouction' na ni vitu ambavyo vinahitajika kwa wingi baada ya chakula. Kweli unaweza kumzuia mwingine asikupandishie bei iwapo gharama zake za utengenezaji zinazidi kutokana na mazingira ya nyumbani kwake si atawatupia na nyie consumers in the end not to mention the higher taxes TZ charges kwa bidhaa zinazo ingia.

Suck Mkullo and Ndullu put the right people na mambo yataanza kwenda sawa taratibu mbona fujo zimeanza baada ya hawa kupewa ajira, surely the're to blame.

 

[Byendangwero]

The assessment of IMF on the perfomance of our economy, has always been self-serving. Always trying to paint a rosy pictures on the successes of the policy it imposed on us, despite the situation on the ground indicating differently; Take for instance this question, of growing disparity between the few haves and the havenots who constitutes the bulk of the nation. It's an indisputed fact that equitable distribution of income is a nessary condition for economic growth, but IMF is silent on that issue despite growing evidence that if it will not be addressed soon, it's likely to tear our nation apart. Again, it's now over two decades since the government started implementing IMF's induced civil service reform. Instead of that reform improving thepulicservice delivery it made it worse, IMF has not bothered to examine where it's civil service reform policy went wrong.There is also this policy of creating the middle income class as an engine of economic development, which it championed and implemented by both legal and illegal means. Instead of this policy contributing to domestc investment it has resulted into capital freight. Again IMF wouldnt admit its misconception which is costing us dearly. The list is long.

 

[TUWEKANE BAYANA]

Nipeni mie tanesco muone kama mtakaa gizani.. Lakini sitoruhusu siasa zenu ziniathiri kama mwekezaji.. Yaani umeme ukikatika mimi nalipa fidia..

 

[Uswe]

Hivi hayo ndo maisha bora kwa kila mtanzania????? Kupiga hatua mbili mbele.. halafu hatua tatu nyuma????

hatujawahi kupiga hatua yeyote mbele toka 2005, au unaongelea zile hatua chache tulizopiga 95-2005

 

[niweze]

These are some of reasons why Kikwete is referred to as incompetent. What is Ndulu doing, rather than kissing Kikwete and ccm. There are a lot incompetent people inside ccm and they always try to look like they hold and collected certificates abroad and they know what they doing. Tanzania has been in recession and poverty for many many years. We as Tanzanians never heard any economic solutions that are effectives or making differences in our society. All ccm is doing trying to paint pictures of investment opportunities so ccm can get more funds from IMF, World Bank and donors. CCM's number one job is to continue screwing and oppressing Tanzanians. Inflation in Tanzania is currently more than 15% and according to Ndulu the inflation is lower than that, this is typical fake economic opinions. If you ask Kikwete, what is unemployment level in Tanzania, he will probably say 5%. Most Tanzanians are uninformed on these issues, if want to calculate simple inflation lets count on food prices before energy crisis and after, what's the value? lets do the same for fuel and other costs? BOT inflation number is just for donor's picture not for Tanzanians.
We as Tanzanians have serious problems in our country and it seems that we are continuing chasing a dog's tail, the root problems of Tanzanian economic issues is Kikwete. We must take action to take these people out, ccm is not friend of Tanzanians and they will not volunteer to get out.