* IMF urges Tanzania to cut power outages
* Government targets inflation in single digits
By Fumbuka Ng'wanakilala
DAR ES SALAAM, March 27 (Reuters) - Tanzania plans to raise spending by 17 percent in 2013/14 to 17.7 trillion shillings ($11 billion) with a focus on infrastructure projects, and aims to lift growth to 7 percent in 2013.
The economy grew 6.9 percent in 2012 from 6.4 percent a year before, above the projected 6.8 percent, helped by transport and communications improvements and higher manufacturing output, Finance Minister William Mgimwa told a closed session of parliament on Monday.
The minister, whose presentation was seen by Reuters on Wednesday, also said the government aimed to reduce inflation to single digits. Prices rose 10.4 percent in the year to February.
East Africa's second-biggest economy, plagued by power cuts and other infrastructure challenges, is fast-becoming a regional energy hub following huge offshore natural gas discoveries. It plans to have a gas utilisation master plan in place in 2013/14.
The sectors that led growth in gross domestic product (GDP) in 2012 were communications which rose 20.6 percent, financial services rising 13.2 percent. Manufacturing rose 8.2 percent and construction 7.8 percent.
"The government plans to boost GDP growth to 7 percent in 2013, 7.2 percent in 2014, 7.5 percent in 2015 and 8.5 percent in 2017," the minister said.
The International Monetary Fund said in October that Tanzania needed to limit power outages to keep growth buoyant, predicting the economy would expand by 6.5 to 7 percent in 2012. It said growth was expected to "remain buoyant" in 2013.
"Priority in the government's 2013/14 budget will be in ... increasing availability of electricity, developing transport infrastructure...and strengthening information and communication technology," he said in the presentation.
INFLATION FALLING
Tanzania signed several agreements with China during President Xi Jinping's visit this week for low-interest loans to build a new port and to develop a national information and communications technology network.
Mgimwa said the government planned to raise 9.88 trillion shillings in tax revenue in 2013/14, up from a targeted 8 trillion shillings a year before.
Loans and grants from external sources would fund a fifth of the total budget, or 3.85 trillion shillings. Commercial borrowing would raise 2.86 trillion shillings, with other income coming from non-tax revenue and revenue from local authorities.
Development expenditure will be 5.15 trillion shillings.
"The government will continue to curb the inflation rate and reduce it single digits," said Mgimwa, adding the government aimed to reduce it to 9.5 percent in June this year and to 6 percent in June 2014.
Inflation eased to 10.4 percent in the year to February from 10.9 percent in January. It has now fallen in 12 of the last 13 months.
The government is working on a draft national gas policy and plans new legislation this year to regulate the industry.
Norway's Statoil and Britain's BG announced this month they were going ahead with plans to build a liquefied natural gas (LNG) terminal in Tanzania after Statoil made its third gas discovery in the region in a year.
($1 = 1617.0000 Tanzanian shillings) (Editing by Edmund Blair; editing by Ron Askew)
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