Home News Tanzania Tanzania economy to recover soon, says IMF

Tanzania economy to recover soon, says IMF

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DAR ES SALAAM, TANZANIA -  The International Monetary Fund (IMF)  projects Tanzania's economy to "recover" once the Government  investments in additional electricity generation and the favourable weather conditions permitting.
The Fund made the projection in last week saying the power crisis that continues to hit the country since end of last year, and the drought will certainly see Tanzania's economy decline from 7.0 % to 6.0 % this year.
 IMF mission chief for Tanzania, Ms Martine Guerguil, noted in a statement to the media in Dar es Salaam that the projected down spiral will be "largely as a result of widespread weather-induced power shortages, but to rebound quickly thereafter."
 The visiting IMF team also said the high global food and fuel prices could also contribute to a slowdown in Tanzania's activities and a raise in headline inflation rate.
 The January 2011 Tanzania inflation rose to 6.4 %, up from 5.6pc in December last year.
The Bank of Tanzania (BoT) admits the 2011 GDP growth has been weighed down by power outages, drought and external shocks due to rising oil prices. BoT Director for Economic Research and Policy, Dr Joe Masawe, said the coming year growth looks bleak, dogged down by declining production in manufacturing sector, piracy, Tanzania shilling depreciation and imported inflation.
The manufacturing sector, according to the BoT, grew by 90 % in 2010, but the prolonged drought and the power outages in the first quarter of this year spelled a doom for the future on the sector.
 However, Dr Masawe noted that although inflation was rising, posing challenges to the economic growth, but we are hopeful it will stay at single-digit bound range."
 During the 2010/11 budget, the Ministry of Finance highlighted economic growth projections for financial year 2010, to 7.0 % and the increase was expected to 7.1 % in 2011 and 7.4 % in 2012.
 The Confederation of Tanzania Industries (CTI), Director of Policy and Research, Mr Hussein Kamote, said manufacturers failed to take advantages of a weak shilling to export more as the sector is currently doing poorly due to the power outages.
 "The manufacturing sector is under produced," in recent months warning that: "The situation will get awfully bad in the second quarter."
 According to CTI, the power supply crisis has led to forced closure or suspension of some 50 industries out its 250 members to avoid more losses.
 Last week Tanesco - the country main power generation and distribution company, floated tenders for the supply of emergency power generators to produce 260 Megawatts to be installed in Dar es Salaam (190MW) and Tanga (70MW).
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