Tanzania has met most of the assessment criteria and indicative targets under the three-year Policy Support Instrument (PSI), the International Monetary Fund (IMF) said this week after completing its fifth programme review of the East African country’s economic performance.
The IMF granted Tanzania the PSI in July 2014 to support the country’s medium-term aims, including maintaining macroeconomic stability, preserving debt sustainability and promoting more equitable growth and job creation.
While the implementation of structural measures lagged, Tanzania posted a strong economic performance during the fifth review, with high growth, moderate inflation and a narrowing of the external current account deficit.
“Tanzania’s macroeconomic performance remains strong. Economic growth was robust during the first half of 2016 and is projected to remain at about 7% this fiscal year.
“Inflation came down below the authorities’ target of 5% and is expected to remain close to the target, while the external current account deficit was revised down on account of lower imports of capital goods,” the organisation said.
The IMF granted waivers for the non-observance of the end-June 2016 assessment criteria on the overall financial deficit and the non-accumulation of domestic expenditure arrears on the grounds that the slippages were minor.
“The programme performance was broadly satisfactory and most assessment criteria for June 2016 and all indicative targets for September 2016 were met.
“While progress in structural reforms identified under the programme has been generally slow, the authorities have recently stepped up efforts to advance them,” the IMF said.
It also suggested that the current tight stance of macroeconomic policies should be eased and the reform efforts to achieve targets in the medium-term development plan redoubled.
“The current tight macroeconomic conditions should be addressed by loosening the short-term policy stance, in line with programme targets. Monetary policy should be eased to address the tight liquidity situation and support credit to the private sector,” the IMF explained.