Tanzania's macroeconomic developments remain favorable: IMF

The executive board of the International Monetary Fund (IMF) said on Saturday that Tanzania's macro-economic developments remained favorable.

Economic growth was strong during the first half of 2014 and was expected to remain close to 7 percent, said a statement issued by the IMF in the commercial capital Dar es Salaam.

"Inflation remains in mid-single digits, consistent with the authorities' target of 5 percent by June 2015," said the statement issued after the IMF executive board completed its first review of Tanzania's economic performance under the program supported by the Policy Support Instrument (PSI).

The statement said performance under the PSI was satisfactory through June 2014, but has deteriorated since risks have risen, stemming from delays in disbursements of donor assistance and external non-concessional borrowing, and shortfalls in domestic revenues.

"Against this backdrop, the authorities' commitment to keep the program on track is welcome, and they have reaffirmed their intention to meet the budget deficit target and will review revenues and adjust expenditures accordingly in the context of the mid-year budget review," said the statement.

The statement said the issue of domestic arrears, which continued to accumulate, needed to be addressed comprehensively and forcefully.

"Work to verify and eventually clear arrears to suppliers already incurred is ongoing," said the statement.

It said that the authorities' plan to prevent future arrears accumulation was appropriately ambitious and will require sustained implementation.

The statement said it will be important to strengthen the coordination between fiscal and monetary policies. Endi