Tanzania projects economic growth of 4% down from 6.9% in 2020 as the pandemic hits different economic sectors. At the same time, the country expects its budget deficit to grow from 2.6% to 2.8%. According to Ventures Africa, this is the country’s slowest economic growth in 3 years after maintaining a 6-7% growth in the past three years.
Tanzania’s Minister of finance Philip Mpango states that the economy could further decline depending on how the pandemic impacts different economic sectors. The economy, mostly dependent on tourism, has been adversely affected by travel restrictions and closed borders. Tourism minister Hamisi Kigwangalla expects revenue from tourism to fall from $2.6 billion to $598m, affecting 477,000 jobs.
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Moreover, other key sectors like mining, agriculture, and manufacturing continue to waver with the global markets. For instance, the country’s manufacturing sector has experienced a drop in sales revenue by over 50%, which has lead to job losses.
Last week, the country’s central bank reduced its benchmark interest rate and the minimum reserve requirement to protect Tanzania’s financial stability. The country reduced its discount rate from 7% to 5%.
Tanzania’s central bank cut the minimum reserves requirement by 1% from 7%. According to the central bank, the move is in anticipation of higher borrowing from banks with less collateral.
President Magufuli also appealed to lenders to consider debt relief to allow Tanzania to fund its healthcare sector.
