Government reveals economic growth plans for 2023

Dar es Salaam. The government will maintain its pro-growth policies in 2023 as it seeks to maintain the economic expansion tempo while cushioning the economy against adverse impacts of the ongoing war in Ukraine and other geopolitical tensions in developed economies.

The deputy Permanent Secretary in the ministry of Finance and Planning, Mr Lawrence Mafuru, told editors in Dar es Salaam yesterday that with the global economy being forecast to remain tough in 2023, the government’s policies will also dwell on stimulating growth while simultaneously mitigating external shocks.

The World Bank forecasts that Tanzania’s economy will expand by 5.3 percent in 2023 which is way above Sub-Saharan Africa’s average growth of 3.6 percent.

Last week, the International Monetary Fund (IMF) managing director, Ms Kristalina Georgieva, was quoted saying that 2023 would be a tough year for the global economy and that inflation would remain high.

She told reporters at the IMF’s headquarters in Washington that there was much hope that China would once again help fuel global growth, likely from mid-2023.

She, however, said that growth in China - which previously contributed some 35 percent to 40 percent of global growth, but had “disappointing” results last year – would largely depend on Beijing not changing course and sticking to its plans to reverse its zero-Covid policies.

And, Mr Mafuru said yesterday that it was important for Tanzanians to analyse their country’s economy in light of what is happening in major economies like China, the Eurozone, the United States and indeed the rest of the world. “When China sneezes, the rest of the world catches the cough,” he said.

Likewise, with the United States tightening its monetary policy in an effort to bring down its high inflation rate and the energy crisis in Europe that emanates from the war in Ukraine, Tanzania and the rest of the world cannot expect any mercy from sellers of imported goods and commodities.

“Being a small economy, we need the world more than it needs us,” said Mr Mafuru, noting that the tight monetary policies adopted by some developed economies as they struggle with rising inflation rates means that Tanzania will find it difficult to acquire its development financing at affordable interest rates.

With high interest rates on commercial loans for development, Mr Mafuru said, the government will also diversify its financing options by looking at private equity.

“The President [Samia Suluhu Hassan] has directed us on that particular aspect and our duty is that of coming up with ways of how that can work,” he said.

By focusing on pro-growth, the government would also come up with fiscal policies that promote businesses, saying that was precisely why the ministry of Finance and Planning was currently collecting views from various stakeholders on tax and taxation as part of the preparations of the 2023/24 budget.

This would go a long way into attracting Foreign Direct Investment (FDI) which would also play a role in boosting Tanzania’s foreign exchange reserves.

“We will also maintain the tempo of investing in capital infrastructure like roads, railway, water and energy among others,” he said.

According to Mr Mafuru, the country could also be looking up to five specific areas which would yield quick economic gains in the near future and beyond.

Tanzania would have to take advantage of its geographical location to boost the transport and logistics sector to spur economic growth.

Recent positive development in tourism - propelled by a return to normalcy after the global Covid-19 pandemic and President Hassan’s The Royal Tour documentary – as well as recent investments in irrigation agriculture and in the distribution of affordable fertilizer offer could offer quick gains to Tanzania. Fast-tracking the development of the planned $30 billion Liquefied Natural Gas (LNG) plant would give the economy its much-needed growth momentum. Boosting the exploitation of natural resources such as gold, nickel and many others that are required in industrial production in the developed world would also be ideal.

Presenting a paper on the impact of the war in Ukraine on the economy, the director of economic research and policy at the Bank of Tanzania, Dr Suleiman Missango, said the impact has been huge and especially due to the fact that it [the war] came at a time when the global economy was only on the recovery stage after the effects of the global Covid-19 pandemic.

“So in short, the war and sanctions resulting from it elevated global uncertainty; exacerbated the supply-demand imbalance; aggravated the rising global commodity prices and impaired growth,” he said.

This has been so because Russia and Ukraine produce one-third of the world’s wheat while on the other hand, Russia is the second largest producer of natural gas and the 3rd largest producer of oil in the world. Russia also accounts for six percent of the world’s coal.