WB sees little to report about Dar`s 5-year economic outlook

BY AISIA RWEYEMAMU

22nd December 2013

Kigoma youth work the family plot using crude tools at Lugofu village in Kigoma Rural district, putting in precious little to the country’s mainstream economic growth. Photo: FILE

As Tanzania’s current economic growth pegged at seven per cent of GDP cent per annum there will be no major changes over the next few years.

 

The 2013 World Bank dismal forecast in a report on the country’s economic update, saying that the sectors which have driven the national economy growth over the recent past, notably the capital-intensive and rapidly expanding communication and financial services, will continue to do so in the future.Economic growth will also be driven by increased activity within the construction sector, particularly within Tanzania’s urban areas and the government’s renewed focus on the development of public infrastructure.

 

The report cautions, however, that unless the global food and energy prices rise dramatically the inflation rate should remain approximately at its current level for the next five years. The external balance should not be subject to major pressure as long as the exports grow.

 

The Bank’s report cautions that if global prices and the demand for Tanzania’s output remain stable and the regional integration process continues, such growth is likely.

 

The value of import is also likely to increase, mainly financed by higher Foreign Domestic Investment (FDI) inflows.

 

In other words, the current account is expected to be financed by corresponding capital inflows, contributing to stable (gross) international reserves at around $4.5 billion.

 

On the fiscal side, the government is expected to reduce the overall deficit from 6.6 per cent of GDP to somewhere around 5.0 percent.

 

The report states that the government should also maintain the ratio of public debt at GDP level below 50 per cent over the next two years.

However, achieving all these will depend on higher levels of revenue mobilization and controlled expenditure.

 

The government should also strive to reduce the level of tax exemptions which currently cost the equivalent to three to four percent of GDP per year.

SOURCE: GUARDIAN ON SUNDAY