UPDATE 1-Tanzania expects to spend more in 2017/18, crack down on tax evasion

(Adds details, background)

DODOMA, Tanzania, June 8 (Reuters) - Tanzania said on Thursday it plans to increase spending in its budget for the fiscal year ending June 2018 by 7.3 percent to 31.71 trillion shillings ($14.21 billion), with a focus on infrastructure, curbing tax evasion and industrialising the economy.

Tanzania has ramped up spending in recent years to build a standard gauge railway, new roads and expand its ports. In his budget speech to parliament, Finance and Planning Minister Philip Mpango said the budget for the next fiscal year would continue in that vein.

“The government plans to increase revenue, curb leakages of government resources, control expenditure and enforce public procurement legislation,” he said.

Mpango said the government plans to borrow 6.17 trillion shillings in coming fiscal year from domestic sources and expects 3.97 trillion shillings from external concessional loans and grants.

The government said it would seek an additional 1.59 trillion shillings from external non-concessional loans.

“The government plans to narrow the budget deficit to 3.8 percent of GDP in 2017/18 from 4.5 percent in 2016/17,” Mpango said.

Tanzania expects its economy to grow 7.1 percent in 2017, up from 7.0 percent in 2016. It aims to contain inflation at 5 to 8 percent range in the 2017 calendar year, he said.

Tax revenue is estimated at 14.2 percent of gross domestic product in 2017/18, up from an estimated 13.3 percent in 2016/17.

“The government will protect the business community, but will not tolerate looting of national resources and tax evasion,” said Mpango.

Some foreign investors said they have been unnerved by unpredictable policies from the government of President John Magufuli, while private-sector credit growth has been hampered by a steep drop in the money supply and a spike in non-performing loans.

Mpango said the government will also scrap value-added tax on transit goods as part of plans to transform Tanzania into a regional trade and transport hub as it vies for cargo with neighbouring Kenya.

“The objective of this measure is to reduce the costs incurred by transporters when using our ports and make them affordable and competitive. This will make Tanzania a preferred route for landlocked countries’ imports and therefore increase employment opportunities and government revenue,” he said.

$1 = 2,232 Tanzanian shillings Reporting by Fumbuka Ng’wanakilala; Writing by George Obulutsa; Editing by Larry King