AFRICA: IMF preises Tanzania for ‘Prudent Legal Reforms’.

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Tanzania has come under rare praise from the International Monetary Fund for what the global lender terms “prudent legal reforms” in its mining sector, land and microfinance.

These changes have seen mining’s contribution to GDP rise to five per cent, from 4.8 per cent the previous year, while gold and US dollar reserve grew above the country’s bench mark–adequate to cover over five months of imports.

Annual inflation trended below four per cent for nearly 12 months, a stable exchange rate and an improved tax collection to nearly 96 per cent of the target.

Now, the IMF team, led by Enrique Gelbard, is urging the country to carry on the targeted economic reforms but it must clear the business environment of barrier that would otherwise the economic stability the country experienced in the recent months.

The IMF team, which visited Tanzania from February 20 to March 4, noted that cautious fiscal and monetary policies that the country has made recently have borne fruits of economic stability.

“The pace of economic activity appears to have increased in recent months prompted by higher public investment, a rebound in exports, and an increase in credit to the private sector. As a result, real GDP growth is estimated to be close to 6 percent, with activity buoyant in the construction and mining sectors. Public debt has also been below 40 percent of GDP,” said Mr Gelbard.

Despite the changes and achievements made, the Gelbard-led IMF team suggested more tax reforms among other changes, saying they would help sustain economic stability.

Annual inflation trended below four per cent for nearly 12 months, a stable exchange rate and an improved tax collection to nearly 96 per cent of the target.

“We highly commend the authorities for their intention to improve governance in tax administration and the team emphasises the urgency to adhere to efficient means of tax collection and control, notably through the use of risk-based audits,” said Mr Gelbard.

According to the IMF mission, the use of risk-based audits will ensure better compliance and timely payment of tax refunds and improve companies’ cash flows.

With regard to government spending, the mission urged the authorities to account and issue reports on implementation of planned measures on a timely basis to avoid blocking relevant expenditure and decisions which will be essential to improve businesses’ cash flows at that particular time.

Tanzania approved the Blueprint for regulatory reforms nearly two years ago for which the government set the official kick-off in July 2019.

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