IMF forecasts Tanzania's growth at 6.2% in 2010

Tanzania’s economy is expected to grow by 6.2 percent in 2010 after expanding 5.5 percent last year, and inflation should ease to 8 percent by the end of the fiscal year, the International Monetary Fund (IMF) says.

East Africa’s second-biggest economy had withstood the global economic crisis because of macroeconomic policies like monetary and fiscal easing, the fund said in a statement released late on Tuesday.

“A stronger than anticipated rebound in the global economy has helped offset the impact of disruptions from the regional drought, floods, and power outages, with the result that we have revised slightly upwards our growth forecasts for Tanzania to 5.5 percent in 2009 and to 6.2 percent in 2010,” IMF said.

The growth, however, was nascent and still seen mainly in lightly-taxed areas, which caused government revenue collection to fall behind targets.

The IMF projected inflation would ease further to 8.0 percent by the end of the fiscal year in June, from 9.6 percent in February.

It also suggested that in the coming fiscal year starting in July Tanzania should gradually scale back fiscal stimulus that was injected to help the economy weather the global crisis.

“A modest improvement in revenue collection and the expiration of discretionary measures that were implemented at the height of the global crisis should narrow the fiscal deficit,” it said.

New financing and higher revenue collections, combined with prudent spending, would help Tanzania achieve its desired infrastructure expansion goals, the fund added in the statement.

Source: Reuters