IMF International Monetary Fund

IMF in Tanzania
For almost 20 years now, the IMF has been supporting Tanzanias adjustment and reform strategy, via three channels. First, the IMF has offered economic analysis and proposals for reform measures that aim at creating conditions for improving the Tanzanian people’s lives in a marked and sustained manner. Second, it has provided technical assistance, in particular in areas of taxation (i.e. the tax system and its administration), public expenditure management and accounting, design and implementation of monetary policy as well as banking sector regulations, and compilation and dissemination of statistics (economic and financial data). Third, it has provided Tanzania with concessional financing of about US$ 834 million, and it has helped Tanzania prepare the underlying macroeconomic economic framework for both donor funding and, whenever needed, also for debt relief from official creditors.

While most of the IMF staff assigned to work regularly on Tanzania is headquarter based and visits the country several times a year, the Fund also maintains a small local office, The Resident IMF Mission, headed by a senior resident representative. This office keeps a regular dialogue with government institutions, the business sector, and representatives from various groups of civil society. It gives advice on implementation of reform policies to government, and works also closely with the large group of development partners that accompany Tanzania on its path to sustained, broad-based economic growth and poverty reduction, as laid out in the MKUKUTA.

Major Accomplishments
Tanzania’s sustained reform efforts and generous support from its development partners over two decades have transformed the economy from total state control and stagnation into a thriving, increasingly modern, market-oriented economy. In the past 10 years, the average annual rate of economic growth exceeded 5 percent, while the rate of inflation came down to the low single digits, and Tanzania built up a comfortable cushion of foreign exchange reserves. Nonetheless, average per-capita income is still very low, only US$ 300 a year, and 35 percent of the population still lives below the poverty line, mostly in rural areas where the pace of modernization has been lagging. A strong point for Tanzania’s future is that this transformation has laid the institutional basis for meeting the challenges on the path to prosperity, by (i) establishing the rules and tools for sound public finances, prudent monetary policy, and the evolution of a more sophisticated and efficient financial sector, and (ii) making headway in dismantling regulatory obstacles for private sector business.

Vision for the Future
The IMF will continue to support the implementation of the MKUKUTA (which aims for a growth trajectory of 8-10 percent per year) and efforts towards reaching the Millennium Development Goals in 2015. Tanzania is blessed with a rich endowment of natural resources and a large group of development partners at its side. The countrys ambitious goals imply a steep reform curve. Strong financial policies and further improvements in the business sector environment will need to be complemented by a major effort to fill the infrastructure gap, groom a skilled labor force, and improve governance. The respect for and enforcement of rules will not only deliver more and better public services with the same resources, but it will also reduce costs of production, and make Tanzania a more attractive place for investors and consumers.