Tanzania’s unpredictable policies harming the economy, IMF

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Tanzania’s economy has been rocked by a series of policy decisions by the administration of President John Magufuli.

Sunday 21, April 2019

(Bloomberg) --The International Monetary Fund (IMF) said that Tanzania’s economy is being harmed by the government’s unpredictable and interventionist policies in a report whose release the East African country has blocked.

Tanzania refused to authorise the publication of the report, the IMF said.

During the tenure of President Magufuli, the government has imprisoned representatives of mining and mobile-phone companies involved in disputes with the state and demanded that gold producer Acacia Mining pay a tax bill of $190 billion, equivalent to two centuries of revenue.

The Barrick Gold Corporation-owned company is now in talks with the state to resolve the dispute.

Jibran Qureishi, a Regional Economist at Stanbic Holdings, said that blocking the report will make it more expensive for Tanzania to tap international markets, especially given that it was proving more difficult to source funding from multilateral and bilateral sources after certain government policies were introduced in September last year.

In a report, the IMF said that other risks to East Africa’s second-biggest economy include delays or little progress in improving fiscal management and rushed public investments that may not have a high rate of return.

“Risks to the outlook are primarily on the downside, these risks would be higher if reforms to protect macro-financial stability are not undertaken,” the IMF said.

Lucie Mboto Fouda, IMF spokeswoman, said, “The lender does not comment on leaked reports.” Some countries have in the past decided not to give consent for staff reports to be published.

The IMF said that it expects economic expansion to slow down to 5.2 per cent in the fiscal year that ends on 30 June, from an estimated 6.7 per cent increase in fiscal 2018.

Tanzania has long had plans to issue an inaugural sovereign Eurobond and was held back by the lack of a credit rating and in March 2018 it obtained a B1 assessment, the fourth-highest non-investment-grade reading from Moody’s.

In September, the central bank rejected claims it printed notes valued at TZS 1.5 trillion ($653 million) for government use.

TAGS : President John Magufuli, IMF, unpredictable and interventionist policies

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