Tanzania’s economy will be subdued if recent government policies and legislation continue, threatening to hit growth in East Africa’s third largest economy, an International Monetary Fund report seen by Reuters on Thursday said.
President John Magufuli’s government has embarked on an ambitious program of industrialization, but foreign investment in the country has fallen after contentious government interventions in the mining and agriculture sectors.
Foreign direct investment fell to 2 per cent of GDP in 2017, down from about 5 per cent in 2014, the World Bank has said.
In a report which was not made public after Tanzanian authorities did not consent to its publication, the IMF said that a weak business environment and the implementation of projects that may not have high rates of return are likely to constrain annual GDP growth to below the 6.3 per cent average recorded between 1998 and 2017.
The 2019 Article IV Consultation with the United Republic of Tanzania Staff Report is part of the IMF’s “mandate to exercise surveillance over the economic, financial and exchange rate policies of its members in order to ensure the effective operation of the international monetary system,” the IMF said in a statement on Wednesday.
The IMF projected a rate of GDP growth of around 4-5 per cent in the medium term, should current policies continue.
That forecast differed from the government’s projection that the economy will grow by 7.3 per cent in 2019 after an estimated 7.2 per cent expansion last year.
“The Fund does not comment on leaked reports,” an IMF spokesperson told Reuters.
“Member countries may (refuse) consent to the publication of their staff reports or the related press releases. While most country reports are published, some countries have in the past decided otherwise,” the spokesperson said.