IMF: Tanzania Should Create Better Business Environment

On 23rd June 2017, the Executive Board of the International Monetary Fund (IMF) completed the 6th review of Tanzania’s economic performance under its Policy Support Instrument (PSI) program.

The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support.

Its helps these countries to design effective economic programs that, once approved by the IMF’s Executive Board, signal to donors, multilateral development banks, and markets the Fund’s endorsement.

Mr. Tao Zhang, IMF Deputy Managing Director and Acting Chair, made the following statement: “Tanzania’s performance under the PSI has been satisfactory, macroeconomic performance has been strong, and the medium-term outlook remains favorable.”

“[Tanzania’] 2017/18 budget reaffirms the authorities’ objective of scaling up public investment while preserving fiscal sustainability. However, potentially overoptimistic revenue projections call for its prudent implementation, including by delaying some large projects until the availability of revenues is confirmed during the mid-year budget review. The authorities are committed to pursuing further public financial management reforms, including strengthening commitment controls to limit the accumulation of new domestic payment arrears.”

“To achieve the authorities’ development agenda and maintain high economic growth, sustained implementation of reforms, including to create a better and more predictable business environment, is critical,” Zhang concluded.

In completing its review of Tanzania, the Board approved the request of the Tanzanian authorities for a six-month extension of the current PSI arrangement and granted a waiver for the nonobservance of the end-December 2016 assessment criterion on tax revenues because the slippage was minor.

The extension was approved from July 2017 to January 2018 to cover the period of negotiations for a successor PSI.