Save economy from sinking, govt urged

Dar es Salaam. The government should seriously consider going back to the drawing board and come up with something that can rescue the faltering economy, experts have said.

Economists who spoke to The Citizen this week warned that the situation could get out of hand if the government continued to dilly-dally on the need to review its budget implementation.

They also said there was an urgent need to think hard on how to improve the country’s general economic performance.

“We should critically look at what is wrong so as to come up with a remedy that will enable us forge ahead properly,” said Prof Honest Ngowi, an economics and business consultant at the Mzumbe University’s Dar es Salaam Business School.

In an interview with The Citizen, Prof Ngowi said monthly and quarterly budget evaluations were now crucial if the government was to have a clear picture of its economic journey. “Assessments are crucial, especially when some data indicate that things are not going in accordance with original plans.”

Prof Ngowi said the government should be worried that it has missed its revenue targets for six months now.

He noted: “If the problem is us, we should find where we went astray… and if it is the donors, let us check what didn’t work in our earlier plans.”

In Parliament, lawmakers recently raised the alarm bells, urging the government to re-think its economic plan before things got worse.

“I strongly advise the government to review its plans. It is not a sin to go back to the drawing board, especially now that reports by the Parliamentary Committee, the minister himself and Bank of Tanzania separately indicate that things are not going according to plan,” said MP Hussein Bashe (Nzega Urban – CCM).

The lawmaker said while the (Finance and Planning) minister is upbeat that the country has managed to save millions of US dollars due to declining imports, the government’s industrialisation plan has taken a major beating.

In its Monthly Economic Review (MER) for December last year, the BoT reported that the import value of goods and services for the year ending November, 2016 declined by 15.8 per cent to $10,257 million from the corresponding period in 2015.

“All major categories of imports declined, except for oil and industrial raw materials,” the report says.

The importation of transport equipment dropped by 32.8 per cent, building and construction by 29.5 per cent, machinery by 36 per cent, fertiliser by 24.5 per cent, and consumer goods by 23.9 per cent.

“This (drop) should disturb us because it points to the fact that there was no investment in building new industries as the government has been advocating,” said Mr Bashe.

The MP said the government should also not take pride in having stepped up revenue collection through increasing the tax burden on the people.

“It all depends on what this money is used for. If we collect it, it means we have removed money from the hands of the common people. If we don’t return it, we are creating chaos in the economy,” he warning.

On the national debt, the MP said the government should stop basing it on the Gross Domestic Product, but base it on real collections.

“The US has decided to raise interest rate on the dollar from 0.25 to 0.5, and it is expected that by December it will reach 0.7 per cent. This means that our debts are accumulating,” he said. “Let us accept that this year’s budget is not realistic. We need realistic budget and priorities which we can attain in short period.”

But speaking in Parliament last week, Finance and Planning minister Philip Mpango allayed the fears, saying the economy was on the right track. The minister told MPs the government was on top of the situation, and urged them to have a clear picture when conceptualising the Tanzanian economy. However, he noted that there are several challenges in some sectors of the economy.

Dr Mpango noted that on average, the individual income of Tanzanians had increased from $350 to $980, annually though there are some years when the average tumbled due to volatility in exchange rates.

Mr David Kafulila, a former MP, told The Citizen that there was still reason for the government to be worrisome. He also cited the total decline of $1,620.9 million in imports as a cause for concern.

“For instance, the total decline for the two components of importations is higher compared to the grand total decline in importations,” he said.

“This tells us why there was a sharp decline in the current account deficit, from $4, 494.6 million to $1,950.2 million. This decline could be favourable to the economy if the factors for it were to be higher growth in exportations.” Mr Kafulila said “unreliable credit facilities” and effects of the fiscal policy had a negative impact on the performance of the private sector.

“With the contraction of the private sector production, especially in manufacturing, goes down, and this means a reduction in the importation of capital goods and machines for production.” In its annual report tabled this week in Parliament, the Industries, Trade and Environment Committee also noted that the government’s industrialisation dream would not be realised in the prevailing economic situation.

The committee noted that as of last month, the ministry of Industries, Trade and Investment had received only Sh7.6 billion of its development budget, a paltry 18.6 per cent of the target. Dr Dalaly Kafumu, the committee chairman, said the industrial drive initiative was rhetoric.