- Economic growth gas been strong in Tanzania during the last three years. Also in the 2003/04 financial year, GDP growth was at 5.6 percent, according to new preliminary statistics from Tanzanian authorities. Especially the manufacturing, mining and construction sectors are the driving forces behind the continued growth.
According to the newest analysis of economic tendencies in Tanzania, published today by the International Monetary Fund (IMF), the poor East African country has "continued to maintain macroeconomic stability and to make substantial progress." Real GDP growth has been strong, averaging almost 6 percent in the past three years, only slightly dropping to 5.6 percent this financial year.
The growth, according to the IMF analysis, is "increasingly driven by improvements in total factor productivity." High growth had reflected both the continued strong performance in the manufacturing, mining and construction sectors, as well as the solid growth in the agricultural sector.
This was demonstrated by statistics provided by authorities in Dar-es-Salaam, compared with "IMF staff estimates," according to the analysis. An IMF team had met with representatives from the Tanzanian Finance Ministry on 6 August to review the country's economic performance.
- These achievements have been the result of sound macroeconomic policies, notably the strengthening of expenditure management, according to the IMF analysis. In addition, sizable donor support had "virtually eliminated the government's need for domestic financing in recent years."
Tanzania's sharply improved growth performance was believed to have had "a notable impact on poverty." While a comparison of 1990/91 and 2000/01 household budget surveys showed only a modest improvement in the incidence of poverty, per capita incomes fell in the first half of the 1990s, likely leading to a deepening of poverty during that period.
Thus, for poverty to have declined over the decade as a whole, the acceleration of growth in the second half of the 1990's likely had a strong poverty-reducing impact, in particular given that income distribution showed little change over the decade, the analysis concludes. This had been particularly evident in Dar es Salaam, where poverty had declined from 28 to 18 percent over the decade.
The IMF however warned of threats to the positive tendencies in Tanzania. "Tanzania's high aid dependency makes its success in macroeconomic stabilisation vulnerable to sudden withdrawals of aid," the Fund warned. Authorities were also urged to address poor governance and low agricultural productivity to secure recent gains.
- Tanzania's strong performance in 2003, despite a drought, demonstrates the economy's growing robustness to adverse shocks, the IMF however concluded. The Fund considered Tanzania's medium-term economic prospects to be "favourable, provided that the authorities continue to pursue sound policies and market-oriented structural reforms."
The IMF also commended Tanzanian authorities for the adoption of a national strategy and action plan to address corruption and improve governance, as well as plans for similar efforts at the local level. The Fund however stressed the "importance of early finalisation of a new anti-corruption law, which would provide a comprehensive framework for effective prosecution of corruption cases."
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