Tanzania Economic Update, January 2019 : The Power of Investing in Girls
Economic performance in 2018 has been mixed. The data that are available suggest some areas of softening in the economy.1 Foreign direct investment declined to 2 percent of GDP in 2017, down from about 5 percent in 2014. The current account deficit...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/930521548691306669/Tanzania-Economic-Update-The-Power-of-Investing-in-Girls-Educating-Girls-and-Ending-Child-Marriage-in-Tanzania http://hdl.handle.net/10986/31242 |
| Summary: | Economic performance in 2018 has been
mixed. The data that are available suggest some areas of
softening in the economy.1 Foreign direct investment
declined to 2 percent of GDP in 2017, down from about 5
percent in 2014. The current account deficit has increased
to 3.8 percent of GDP in the year ending September 2018,
from 2.2 in the preceding 12 months. Recent Bank of Tanzania
data confirm lower cashew exports and 2017 decline in
non-traditional exports has continued into 2018, which
raises concerns on prospects for longer term growth. The
Tanzania Revenue Authority is reporting that many large tax
payers are unable to meet their tax obligations on time.
Nonperforming loans have declined recently to 9.7 percent in
September 2018 from 12.5 percent in September 2017, but
remain almost double the 5 percent statutory threshold.
Banks have limited lending to businesses and interest rates
are high (18 percent for one-year loans in August 2018),
though some banks have lowered benchmark lending rates. On a
positive note, credit to the private sector has been edging
up, reaching 4.9 percent in the 12 months ending September
2018. The fiscal deficit is still low, not counting payment
arrears and delayed refunds of value-added tax. The 2017/18
budget deficit after grants of 1.3 percent of GDP suggests
effective spending management but does not factor in payment
arrears, with an estimated stock of over 3 percent of GDP.
Government is paying down roughly TZS 1 trillion of verified
arrears per fiscal year. The low deficit is the result of
controlled recurrent expenditures and under execution of the
development budget by more than 40 percent. Contributing
factors include shortfalls in domestic revenue and external
financing for large projects. Public debt is currently
sustainable, but there is need for the Government to
consider cost-effective financing options and manage
associated risks to support public investments. The 2018/19
budget targets public investment to consume 45 percent of
total spending, equivalent to 9.1 percent of GDP compared to
5.5 a year prior. |
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