DAR ES SALAAM, Dec 13 (Reuters) - The International Monetary Fund (IMF) called on Tanzania to speed up reforms and spend more to prevent a slowdown in one of the world’s fastest growing economies.
President John Magufuli pledged to reform an economy hobbled by red tape and corruption and begin a programme to develop public infrastructure after he was elected in 2015.
But the IMF said in its latest review that progress has been slow, while a lack of public spending - coupled with private sector concerns over policy uncertainty - was curtailing growth in East Africa’s third-biggest economy.
“Improvements in the business environment - policy predictability based on a strong dialogue with the private sector, regulatory reforms, timely payment of value-added tax (VAT) and other tax refunds, and eliminating domestic arrears — must be pursued with urgency,” the IMF said late on Tuesday.
Tanzania’s gross domestic product (GDP) growth slowed to 6.8 percent in the first half of this year from a 7.7 percent expansion in the same year-ago period.
The economy has been growing at around 7 percent annually for the past decade, but the World Bank said in November that growth will likely slow to 6.6 percent in 2017.
The IMF said while Tanzania’s first half GDP growth in 2017 was “still strong”, a sharp fall in lending to the private sector - prompted by high non-performing loans - pointed to a continued slowdown in growth.
In June, the IMF said Tanzania may have to delay implementing some of its infrastructure projects because its revenue expectations for 2017/18 may not be achieved.
In a bid to profit from its long coastline, Tanzania wants to spend $14.2 billion over the next five years to build a 2,561 km-railway network - part of plans that also include upgrading ports and roads to serve growing economies in the region.
The IMF said subdued government revenue collection and delays in securing financing for projects have held back development spending and hurt economic growth. (Editing by Aaron Maasho and Alexander Smith)