Shirika la Kimataifa la Fedha duniani IMF limeonya kuwa kama serikali ya Tanzania itaendelea na sera yake ya kubana fedha huenda ukuaji wa uchumi wa nchi ukashuka na kupelekea uchumi kuporomoka.
IMF imedokeza pia kuwa mikakati ya kuufufua uchumi wa nchi iko slow sana na pia matumizi ya umma yameshuka kutokana na mzunguko mdogo hali ambayo si nzuri kiuchumi.
Taarifa hio inasema japokuwa uchumi wa nchi mwanzoni ulionekana unakua kwa 7%, lakini kwa hali iliyopo sasa huenda muda si mrefu uchumi wa nchi ukadorora.
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THE International Monetary Fund (IMF) has reiterated its gross domestic product (GDP) projection for Tanzania at an expansion of around 7 per cent this year, but warned that the country's economy faces downside risks that could pull down growth targets.
President John Magufuli launched a reform drive after he was elected a little over a year ago, promising to transform an economy hobbled by red tape and corruption, and carry out a major public infrastructure development programme.
But the IMF has now warned that reform progress has been slow and public spending is subdued, causing an increasingly serious liquidity tightness in the local economy.
"There are risks that could adversely affect economic growth going forward, arising from the currently tight stance of macroeconomic policies, the slow pace of credit growth that may become protracted, slow implementation of public investment, and private sector uncertainty
about the government’s new economic strategies," the Washington-based global money lender said in its latest policy support instrument review for Tanzania.
It said although the country posted robust economic growth in the first half of last year and was still on track to grow by around 7 per cent, there are some worrying signs in the economy.
Tanzania, regarded as East Africa's second-biggest economy, is expected to eventually hit growth of 7.2 per cent, driven by the mining, telecoms, construction and financial services sectors.
But economic growth slowed down to 6.2 per cent in the third quarter of 2016, compared with 6.3 per cent in the same period the previous year.
The IMF cautioned that the targeted economic growth might not be achieved due to a number of internal risks.
"Monetary policy should be eased to address the tight liquidity situation and support credit to the private sector," it said, adding:
"The current tight macroeconomic conditions should be addressed by loosening the short-term policy stance."
There are already fears that several policies undertaken by the government could undermine growth of the economy.
Analysts say an aggressive tax crackdown, drastic government spending cuts, and the decision to withdraw over 500 billion/- in public funds from commercial banks are already taking their toll on the economy.
The policies of the new government have been blamed on a liquidity squeeze in the economy, which has curtailed money circulation, analysts said.
Banks have posted a sharp increase in non-performing loans (NPLs), as more lenders fail to repay loans.
As a result of rising NPLs and a cash crunch in the economy, many banks
have cut lending to the private sector.
The country’s biggest commercial bank, CRDB, and the state-owned TIB Investment Bank recently posted losses for the first time in several years, raising alarm bells on the state of the country's financial sector.
The agricultural sector, for so long recognised as the mainstay of the country's economy, posted the slowest growth of all economic sectors in the third quarter of this year, at a paltry 0.3 per cent.
The slow growth of the cash-starved agro sector has been compounded by a
lack of financing from commercial banks.
Several observers, including former opposition member of parliament David Kafulila, have urged the government to come up with a stimulus package to boost slagging economic growth.
In a previous review of Tanzania’s economy in late October last year, a team of IMF experts concluded that the government was literally sitting on a pile of cash to the detriment of national development projects.
According to that review, the government appeared to be so 'stingy' in spending money that it actually made a budget surplus in the first quarter of 2016 (January-March), instead of the customary deficit.
The IMF experts even advised the government to borrow from external sources and spend the money to fund infrastructure projects.
"Current (government) spending has been lower than programmed. Together with the customarily slow pace of project implementation at the beginning of the fiscal year, this has led to a fiscal surplus in the first quarter," they said.
According to the Bretton Woods institution, Tanzania is at low risk of external debt distress and has room to borrow externally on concessional and non-concessional terms to meet its financing needs.
The IMF is the lender of last resort when developing countries get into trouble.Since coming into office in November 2015, President John Magufuli has led a ruthless drive to root out corruption at government level, crack down on tax evasion, and curb mismanagement of public funds.
This has resulted in drastic cost-cutting measures by the government, causing a liquidity squeeze on the economy.
Source: The Guardian