Once hailed as an effective leader as he cracked down on corruption and bureaucratic inefficiency, is "The Bulldozer" slowing down the economy of Tanzania? The investment community is worried about the government's economic policies
The International Monetary Fund said on Wednesday that Tanzania had not consented to the release of an official report on the East Africa economy. The report is part of the lender’s annual check-ups of member country economies and analysis of the statistics from the government.
“On March 18, 2019, the executive board of the IMF concluded the consideration of the 2019 Article IV Consultation with the United Republic of Tanzania,” the IMF said in an emailed statement on Wednesday. “The authorities have not consented to publication of the staff report or the related press release.”
Article IV of its Articles of Agreement gives the IMF authority to inspect the economic, financial and exchange-rate policies of its members to ensure a smooth-running international monetary system. This entails at least one annual visit by IMF economists to the member country to analyse data and hold meetings with government and central bank officials. A report of the findings is then submitted to the executive board, which summarises the reports and transmit their views to the government of the country and publishes a summary of the report on its website with the consent of the member nation.
International investors have been alarmed by the events as there are already fears that the government has not been forthcoming with the true state of the economy. The government’s move to criminalise release statistics that contradict its official releases has added to this scepticism of the international community, the World Bank has said the law is deeply concerning.
Financial Times reported that they had a glimpse of the unpublished report. The report is said to have stated that there were “serious weaknesses in the data” used to project economic growth of 7 percent.
The report said that “urgent steps are required to improve the national accounts” and urged Mr Magufuli’s government “to ensure an open and independent statistics agency”.
What could also have caused the refusal of the government’s consent is the report’s claim that there has been a slowdown in investment activity since Mr Magufuli came to power. Foreign investment fell to 2 per cent of GDP in 2017 from roughly 5 per cent in 2014, according to World Bank data.
Tanzania’s economy has been rocked by a series of policy decisions by the administration of President John Magufuli, a leader whose nickname is “The Bulldozer.” During his tenure, the government has imprisoned representatives of mining and mobile-phone companies involved in disputes with the state and demanded that gold producer Acacia Mining Plc pay a tax bill of $190 billion, equivalent to two centuries of revenue. The company, owned by Barrick Gold Corp., is now in talks with the state to resolve the dispute.
Bloomberg stated that the report it had seen cited other risks to East Africa’s second-biggest economy including “delays or little progress in improving fiscal management” and rushed public investments that may not have a high rate of return.
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