The International Monetary Fund (IMF) has called on the government to boost revenue collection and improve efficiency in expenditure to create fiscal space for higher infrastructure investment which has expanded deficit.
The Bretton Woods institution said last week that it is crucial to raise domestic revenue collection that would cushion the heightened risks of debt distress after the government increase borrowings to finance major transport and energy infrastructure projects which are included in its ambitious development agenda.
"Somewhat higher fiscal deficits could be sustained for a few years while keeping a low risk of debt distress. However, creating fiscal space for higher infrastructure investment through sustained efforts to raise domestic revenue and increasing spending efficiency, particularly in public investment, is imperative," it said after completion of the fourth review of Tanzania's economic performance under the programme supported by the Policy Support Instrument (PSI).
Tanzania wants to capitalize on a long coastline and upgrade existing railways and roads to serve growing economies in the land-locked heart of Africa from Uganda on its north border to Malawi in the south.
The East African second largest economy is embarking on key projects ranging from ports, roads, and a railway line that will further open up trade amongst neighbouring landlocked countries of Burundi, Rwanda, Uganda, DR Congo and Zambia.
Last week it secured a $7.6 billion (about 16 trillion/-) soft loan from China's Exim Bank for construction of a 2,190-kilometre standard gauge railway whose first phase will constitute the construction of the railway line from Dar es Salaam to Mwanza via Isaka and Tabora.
The government has also set aside about 1tri/- from the current budget for the construction of the project which is expected to start this year. Once completed, it is expected that the project will revolutionise Tanzania's economy and other countries in Eastern and Central Africa including Burundi, Rwanda and Democratic Republic of Congo (DRC).
The standard gauge railway is the newest major public investment that is expected to stimulate the economy and expedite growth and development. Other key infrastructure investments include the natural gas pipeline from Mtwara to Dar es Salaam whose construction was financed by US$ 1.2 billion loan from China's Exim Bank.
The government has raised spending by 31 percent to 29.53 trillion Tanzanian shillings ($13.53 billion) in the 2016/17 fiscal year budget which focuses on development of infrastructure and industrial projects.
Source: Tanzania Daily News.