THE country’s macroeconomic performance remains robust while the medium-term outlook stays favourable, International Monetary Fund (IMF) said yesterday.
The Breton Wood institution said in the
Policy Support Instrument (PSI) six months outlook to...
this month that
the performance under the instrument “has been satisfactory” despite
some challenges. Thus in completing the review, the IMF approved the
country’s request for a six-month extension of the current PSI
arrangement to next January.
The Fund also granted a waiver for the
non-observance of the end-December 2016 assessment criterion on tax
revenues because the slippage was minor. However, Mr Tao Zhang, Deputy
Managing Director and acting Chair, said at the end of the review that
sound macroeconomic policies and advance structural reforms are
essential.
“Going forward, continued sound
macroeconomic policies and increased efforts to advance structural
reforms will be essential to sustain macroeconomic stability and high
economic growth, and deliver on the devel opment agenda,” Mr Tao said.
The team pointed out some challenges as
2016/17 budget execution, more predictable business environment and
overoptimistic revenue projections. The team said recently efforts to
step up external financing mobilization and ease the liquidity situation
should help enhance budget implementation.
The move would help to avoid further
accumulation of domestic payment arrears, and support credit to the
private sector. IMF observed that the 2017/18 budget reaffirms the
authorities’ objective of scaling up public investment while preserving
fiscal sustainability.
“However,” Mr Tao said, “potentially
overoptimistic revenue projections call for its prudent implementation,
including by delaying some large projects until the availability of
revenues is confirmed during the mid-year budget review.”
According to IMF, the government is
committed to pursue further public financial management reforms,
including strengthening commitment controls to limit the accumulation of
new domestic payment arrears.
“Recent measures to loosen the monetary
policy stance are appropriate given the benign in flation outlook and
decelerating credit growth. “Going forward, the duration and extent of
monetary loosening should be coordinated with fiscal developments,” Mr
Tao said.
Also, plans to foster credit standards
and increase capital buffers are key initiatives to ensure the banking
system’s soundness. “To achieve the [country’s] development agenda and
maintain high economic growth… more predictable business environment, is
critical,” he said.
The PSI programme has been instrumental
for Tanzania in sustaining macroeconomic stability. It is against this
background that the extension was approved from July 2017 to January
2018 to cover the period of negotiations for a successor PSI.
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