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Tanzania’s Economy: A Report from the International Monetary Fund (IMF)

Tourist Arrivals and Receipts Recover Strongly

The tourism sector in Tanzania has made a strong recovery, with arrivals and receipts reaching pre-pandemic levels. Here are some key statistics:

  • Tourist Arrivals: 2022 saw a significant increase in tourist arrivals, with numbers reaching those of the pre-pandemic period.
  • Tourist Receipts: In 2022, tourist receipts totaled US$ million.

Budget Outturn: A Mixed Picture

The budget outturn for Tanzania showed some mixed results:

Domestic Revenue Decreases

  • Total Domestic Revenue: Decreased by 3.3% to Tsh 13,873 million.
  • Tax Revenue: Decreased by 1.7% to Tsh 11,169 million.
  • Non-Tax Revenue: Decreased by 10.0% to Tsh 2,704 million.

External Grants Decline

  • External Grants: Decreased by 40.6% to Tsh 666 million.

Expenditure: A Mixed Picture

The expenditure side of the budget also showed some mixed results:

Recurrent Expenditure Decreases

  • Total Recurrent Expenditure: Decreased by 9.4% to Tsh 10,517 million.
  • Wages and Services: Decreased by 8.8% to Tsh 4,152 million.

Interest Increases

  • Interest Payments: Increased by 14.5% to Tsh 1,388 million.

Development Expenditure: A Decline

Development expenditure also declined in the budget outturn:

  • Locally Financed Development Expenditure: Decreased by 9.0% to Tsh 5,708 million.
  • Externally Financed Development Expenditure: Decreased by 5.8% to Tsh 1,495 million.

Primary Balance and Overall Balance: A Deficit

The primary balance and overall balance both showed deficits in the budget outturn:

  • Primary Balance: Decreased by 1.0% to a deficit of Tsh -1,792 million.
  • Overall Balance: Decreased by 6.9% to a deficit of Tsh -3,180 million.

Financing: A Shift towards Domestic Financing

The financing side of the budget showed a shift towards domestic financing:

  • External Financing: Decreased by 25.6% to Tsh 2,481 million.
  • Domestic Financing: Increased by 121.9% to Tsh 700 million.

Additional Points

Some additional points worth noting include:

  • Inflation Remains Low: Inflation remains below the Bank of Tanzania’s (BoT) target.
  • Foreign Exchange Sales: The BoT has relied on foreign exchange sales rather than exchange rate flexibility for its response to external shocks.
  • Gross International Reserves Decline: Gross international reserves declined by US$1.2 billion to US$5.2 billion at end-December 2022, largely reflecting FX sales to the government for public investment imports and external debt service.
  • Financial Sector Stability: The stability of the financial sector has improved, but some pockets of vulnerabilities persist.