Tanzania Sees Rapid Growth as Gov’t Increase Expenditure on Infrastructure Development


Tanzania’s economy is on track this year to expand 7.2 percent — among the fastest growth rates in the world — as higher government spending helps blunt the impact of the commodity rout, Finance Minister Philip Mpango said.

The gold- and natural gas- producing nation expanded 7.9 percent in the second quarter, compared with 5.5 percent between January and March, buoyed by the transportation and mining industries. The government increased spending by about a third in this year’s budget to devote more resources toward infrastructure, including building roads and power plants.

“So far the challenge we have had is on the commodity prices and, of course, we are taking countercyclical measures to make sure we are not hit as hard — basically drawing on our experience from 2007, 2008” during the financial crisis, Mpango said in an interview in Washington on Thursday.

 With growth picking up in the second quarter of 2016, “we are fairly within our projections,” Mpango said. Expansion is forecast at about 7.4 percent next year, he said.

The government’s outlook is roughly in line with growth estimates released by the International Monetary Fund this week. It cited Tanzania among a handful of sub-Saharan African economies showing resilience in “challenging conditions.” The region’s overall expansion is forecast by the IMF at 1.4 percent this year and 2.9 percent the next.

While Tanzania’s debt load is currently manageable, high borrowing costs are a concern for policymakers, said Mpango.

“We have to be worried, particularly when we go to borrow commercially. The rates are high and therefore, we need to worry,” he said. “But for the time being, all the debt indicators show that we are fine.”

 The East African nation secured $1.6 billion in loans and grants from the World Bank to finance projects, including $200 million for the state-run electricity utility, Tanesco, the finance ministry said in a statement Thursday.
Source: Bloomberg