Tanzania's legislators, civil society seek greater role in reforms and poverty reduction policymaking

• Author: Michaela Schrader
• Position: IMF External Relations Department
• Pages: 320

Page 320

There was broad agreement among participants that Tanzania's reforms, supported by the IMF and the World Bank, have helped the country make a successful transition from a state-controlled to a market- oriented economy. In recent years, Tanzania has enjoyed high economic growth (around 6 percent a year), low inflation (around 4 percent a year), robust reserves, increasing foreign capital inflows, improved government revenue collection, and sound expenditure management. This performance is in stark contrast to the previous 30 years when annual growth averaged about 2 percent (less than the rate of population increase) and annual inflation averaged more than 30 percent.

The country's strong reform efforts have attracted substantial support from the international community, including $3 billion in debt relief under the IMF-World Bank Heavily Indebted Poor Countries (HIPC) Initiative, and aid is expected to increase significantly in FY 2005 to $1.4 billion (equivalent to 13.3 percent of GDP). "Tanzania can serve as an example of what can be achieved with determination and effort," said Robert Sharer, the IMF's mission chief for Tanzania.

However, much remains to be done if Tanzania is to meet the United Nations Millennium Development Goals. Participants pointed to the fact that poverty and disease are still widespread, the country continues to be dependent on donor assistance, development efforts remain constrained by a narrow export base and regional instability, and the benefits have not been evenly spread-with 90 percent of the poor living in rural areas. Parliamentarians asked that the benefits from debt relief under the HIPC Initiative be used to improve social services and increase expenditure for the poor. Representatives for the local nongovernmental organizations and media wondered whether the poor would even benefit from macroeconomic stabilization.

Peter Ngumbullu, IMF Executive Director for the constituency including Tanzania, said that these challenges must be addressed through ambitious and consistent reforms, keyed in particular to improving the business environment and bolstering the agricultural sector. Deputy Minister of Finance Festus Limbu reiterated his government's commitment to reforms, noting...