IMF forecasts Tanzania economy to grow at 5pc

Tanzania’s economy will be subdued if recent government policies and legislation continue, threatening to hit its growth, an International Monetary Fund (IMF) report said on Thursday.

President John Magufuli’s government has embarked on an ambitious programme of industrialisation, but foreign investment has fallen after contentious government interventions in the mining and agriculture sectors.

Foreign direct investment fell to two per cent of GDP in 2017, down from about five per cent in 2014, the World Bank has said.

Business environment

In a report which was not made public after Dar authorities did not consent to its publication, the IMF said that a weak business environment and the implementation of projects that may not have high rates of return are likely to constrain annual GDP growth to below the 6.3 per cent average recorded between 1998 and 2017.

The 2019 Article IV Consultation with Tanzania Staff Report is part of the IMF’s “mandate to exercise surveillance over the economic, financial and exchange rate policies of its members to ensure the effective operation of the global monetary system,” IMF said in a statement.

The IMF projected a rate of GDP growth of around four to five per cent in the medium term, should current policies continue.

That forecast differed from the government’s projection that the economy will grow by 7.3 per cent in 2019 after an estimated 7.2 per cent expansion last year. “The Fund does not comment on leaked reports,” an IMF spokesperson said.

“Member countries may (refuse) consent to the publication of their staff reports or the related press releases.”

During discussions with officials, authorities indicated that they will undertake corrective actions but risks remain, the IMF said.