Samuel Kamndaya
8 June 2011
Dodoma — Finance and Economic Affairs minister, Mr Mustafa Mkulo on Wednesday presented Tanzania’s economic outlook for the period between financial years 2011/12 and 2015/16, outlining seven specific targets to be achieved during the fiscal year that starts next month.
The total market value of goods and services produced in the country (Gross Domestic Product – GDP) is projected to grow by six per cent this year. Last year, the country’s GDP was Sh32.293 trillion, basing on existing market prices, Mr Mkulo told parliament.
Apparently, the new target is in line with projections by the International Monetary Fund (IMF), which recently revised Tanzania’s GDP growth prospects from 7.2 to six per cent, on account of increasing food prices and electricity problems, among others.
And, without projecting actual numbers, Mr Mkulo said that the government will strive to contain inflation rate down to single-digits this year.
“Madam speaker, our aim will be to contain inflation rate to single-digit levels,” he told a packed parliament.
Inflation
Tanzania’s year-on-year inflation rate which slowed to a five-year low record level of 4.5 per cent in September last year, has been on the upward swing, reaching 8.6 per cent in April 2011.
Without outlining further on how the cost of living will be contained to affordable levels, the Finance and Economic affairs minister went on to pledge that the country aims at increasing domestic revenue collections to 17.2 per cent of GDP.
The ambitious domestic revenue collections target may be against a drawback of missed revenue targets for the past two consecutive years.
Revenue
An analysis by the government indicates that domestic revenue for the current financial year 2010/2011 is likely to be below target by Sh374.172 billion by June (this month).
With poor disbursement of funds from development partners, it is also estimated that actual revenue shortfall in the 2010/2011 Budget will be Sh510,417 million. In the same vein, during the 2009/2010 financial year, total domestic revenue collection (excluding what is generated by the Local Government Authorities) reached only Sh4.662 trillion – a nine per cent shortfall of Sh5.096 trillion.
But Mr Mkulo hastened to say that focus will, in 2011/2012 budget, be on expanding the tax base, reducing tax exemption levels as well as intensifying tax collections on properties.
“We will increase domestic revenues through identifying new revenue sources, increasing property tax collections and through reducing the levels of tax exemptions,” he said.
Mr Mkulo projects Tanzania’s foreign reserves as remaining within admirable levels. It should be enough to cover for imports of not less than 4.6 months.
Commercial Banks
Another daunting target for Mr Mkulo and his team to work on in 2011/2012 is that of reducing the gap between lending interest rates and deposit interest rates that are being offered by commercial banks in the country.
He did not give actual figures of the much-needed drop in the gap between lending and deposit interest rates.
The government will also strive to make sure that the exchange rate remains in levels that are in line with market forces.
The other goal, according to Mr Mkulo, will be to make sure that it contains Broad money circulation down to reasonable levels but in accordance with economic growth prospects.
Tanzania banks its hopes of attaining all the seven targets on sustainability of the country’s peaceful nature and streamlining the monetary policy in a way that matches with fiscal policy, among other factors.
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Govt Outlines Seven Targets for Growth