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 development
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 inflation 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.
Article source: Daily News TZ