Hidden Bibliographic Details
| Other authors / contributors: | Gigineishvili, Nikoloz, author, (IMF staff)
Kpodar, Roland, author, (IMF staff)
Jang, B. (Byung), author, (IMF staff)
Joly, Hervé, 1966- author, (IMF staff)
International Monetary Fund, publisher.
International Monetary Fund. African Department, sponsor.
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| ISBN: | 9781498390941
1498390943
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| Notes: | "July 2016."
"June 30, 2016; approved by African Department; prepared by Thomas Baunsgaard, Nikoloz Gigineishvili, Roland Kpodar, Byung Kyoon Jang, and Hervé Joly"--Page 2 of pdf.
Includes bibliographical references.
Description based on online resource; title from pdf title page (IMF.org website, viewed September 8, 2016).
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| Summary: | This Selected Issues paper examines productivity, growth, structural reforms, and macroeconomic policies in Tanzania. Tanzania experienced macroeconomic stabilization and significant structural change over the last three decades, including two major waves of reforms, first in the mid-1980s and more importantly in the mid-1990s. Both reform waves were followed by total factor productivity (TFP) and growth spurts. Over the recent period, TFP growth decreased, which coincided with a less strong reform drive. It is suggested that a TFP-led growth model is superior and that vigorous reforms are needed to foster further structural transformation of the economy and sustain high productivity gains and investment. -- Revenue mobilization has been a long standing concern in Tanzania. In light of the country's large development needs, successive governments have placed revenue mobilization at the center of economic policies with the objective to support investment in education, health, and critical infrastructure while safeguarding fiscal sustainability. Reliance on domestic revenue mobilization has also emerged as a top priority because of the significant decline in donor support. Over the last 10 years, external grants dropped from 5.7 percent of GDP in 2004/05 to 1.2 percent of GDP in 2014/15. Further, the recent upward revision to GDP by about 30 percent uncovered a lower than previously thought tax-to-GDP ratio. --
Tanzania has large development needs. In line with the objectives of the Development Vision 2025, the Second National Strategy for Growth and Reduction of Poverty (MKUKUTA II) aimed at accelerating growth, alleviating poverty, improving living standards, and fostering good governance and accountability. The strategy required raising investment spending from 6.4 percent of GDP in 2009/10 to 9.6 percent of GDP by 2014/15. -- Tanzania has made significant natural gas discoveries in deep offshore waters during the last three years.2 Developing these gas resources would entail the largest investment ever made in Tanzania, amounting to about today's GDP. The size of the gas resources would largely exceed domestic needs, and therefore would likely require a predominantly export-oriented project (involving liquefied natural gas (LNG) development) to attract international investors. None of the potential investors has yet reached a decision on whether to proceed with the development of the gas resources. The outgoing parliament in July 2015 approved new legislation to guide the sector including a Petroleum Act and an Oil and Natural Gas Revenue Management Act. Nonetheless, delays in allocating land for the LNG facility and the limited engagement in negotiating a host government agreement have shifted back the expected time for the final investment decision, which is now unlikely to be taken before 2020 or thereabout. The collapse in natural gas prices has added an additional element of uncertainty. At current prices, the profitability of the potential project is substantially reduced compared with a few years ago.
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