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| [PHOTO: Bundesarchiv, Bild 105-DOA0075 / Walther Dobbertin] [License: CC-BY-SA] |
Dar es Salaam, Tanzania: The Tanzanian economy continued to post impressive growth
with a rate of more than 6 per cent over the past year in addition to a marked
reduction in its fiscal deficit, despite a difficult external environment. This
impressive performance resulted from the Government’s flexibility in utilizing
fiscal and monetary policies, especially amidst the surge in inflation
experienced from November 2011.
These are the major highlights in the latest Tanzania
Economic Update released by the World Bank, titled: ‘Spreading the Wings:
From Economic Growth to Shared Prosperity’.
It is the second of a biannual series that was launched by
the Bank in Tanzania in February 2012. The aim of the series is to foster
constructive policy dialogue between stakeholders and policymakers and to
stimulate debate on essential economic issues.
“With a GDP growth rate of 6.5 percent during 2011/12 and
manageable fiscal and current account deficits, Tanzania has performed better
than most developed countries and better than many fast emerging economies,
including India, and Brazil,” wrote Jacques Morisset, main author and Lead
Economist for Tanzania, Uganda and Burundi.
The strong fiscal performance exhibited by Tanzania is
further attributed to high tax collection and to Government’s effort to
restrain non-priority expenditures. Such adjustment did not apply to
development expenditures, which continued to expand with the objective to address
existing gaps in infrastructure all over the country.
Furthermore, with this performance and despite persistent
high inflation, Tanzania should continue to enjoy positive prospects with
forecasted GDP growth of 6.5 to 7.0 per cent through 2014 for as long as it is
not impacted upon by other external shocks including commodity and food price
fluctuations. The report however warns
that the current performance will only endure if Government places emphasis on
fiscal and debt sustainability and the optimal use of public resources, close
monitoring of public accounts, including those of public agencies and
enterprises operating in the energy sector.
The Economic update, however, stresses that Tanzania’s
strong economic growth has continued to elude rural households which constitute
approximately two thirds of the total population and 80 percent of the poor and
who continue to survive in appalling conditions. Facilitating the inclusion of
rural households into the country’s growth process should be at the core of the
policy debate in Tanzania.
While there is no blueprint for the achievement of
socio-economic transformation, Tanzania can find inspiration in the experience
of successful countries that had similar profiles a few decades ago.
“The experience of Vietnam and Malaysia has shown that
widespread rural poverty does not have to be enduring,” said Philippe Dongier,
World Bank Director for Tanzania, Uganda, and Burundi. These countries have
been able to manage three forces that have the potential to produce
transformational impact in Tanzania. These are agricultural commercialization,
diversification toward high value products and off farm activities; and
migration toward urban centers.