BY THE GUARDIAN REPORTER
“The depreciation of the Tanzanian shilling since the beginning of the year has been gradual and quite modest at about 4 per cent,” Antoinette Monsio Sayeh, IMF Director for Africa said in an interview recently in Dar es Salaam.
“Exchange rate fluctuations are a normal and appropriate response to changes in demand and supply of foreign exchange,” she went on to explain.
According to the Fund’s Director, such modest depreciations which had seen doubtful questions directed to the Central Bank of Tanzania (BoT) actually help Tanzanian exports become more competitive.
Sayeh explained that if Tanzania’s inflation were to remain higher than its trading partners for a long time with a fixed exchange rate, then Tanzanian exports would become unattractive for foreigners to buy.
Tanzania’s annual headline inflation rate released by the National Bureau of Statistics remained below 7 per cent in the last 12 months, however, IMF maintains that it is good for the national economy for the BoT to encourage a strong foreign reserve position.
“IMF fully supports the central bank’s commitment to a flexible, ‘market-determined exchange rate’ that will help the economy adjust to external developments,” she said.
The top ranking official pointed positive reactions over the country’s macro-economic performance saying it was all about Tanzania’s decision to embark upon a reform path that indeed generated significant returns to the country in the course of the years.
She also announced that the Fund is reviewing its Policy Support Instrument (PSI) to among other things help provide policy advice on the challenges that Tanzania faces across key macro-economic issues – fiscal and monetary policy.
“The instrument will also help portray a clear picture of the country’s fiscal performance in regards with the debt burden if it’s too big or not for the country,” she explained further.
The development comes in the wake of growing politicians complains that the nation is due to suffer from the soaring foreign debt but she was quick to warned that such conclusions can only be reached after deliberations and assessments between government authorities and civil society organisations.
Speaking on the role of the private sector, Sayeh acknowledged that the private sector has a significant part to play in the economic growth of the country.
However she pointed out that she Tanzania is still lagging behind on some key indicators of doing business – the International Finance Corporation (IFC) and the World Bank doing business indicators-and the country’s private sector investment environment and activity can be improved.
“This is certainly part of the dialogue we will have with the government to urge them to work on improving the environment for private sector activities,” she said citing that Tanzania continues to have a significant number of public enterprises to date.
“The government should always make sure they evaluate the performance of those enterprises to ensure they are well managed and if there are considerations of privatizing them…public enterprises must be well managed to contribute to the welfare of all Tanzanians,” she said.
SOURCE: THE GUARDIAN
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