The IMF issued a report on 5 March 2020 following consultations under Article IV of the IMF’s articles of agreement.

The report notes that Tanzania currently has economic growth of around 6%, with adequate reserves and manageable pubic debt of less than 40% of GDP. The IMF considers that decisive action is required to ensure increased private sector investment, create jobs, and support high economic growth. Discussions covered measures to mobilise domestic revenue, resolve problems relating to arrears of VAT refunds and expenditures, increase efficiency of government spending on education and health and remove regulations that adversely affect business.

The IMF considers that tax reforms are necessary to increase government revenue and these should include improved governance in tax administration. More efficient tax collection could be achieved by using risk-based tax auditing, thereby increasing tax compliance. Timely payment of tax refunds would help to improve taxpayers’ cash flow. A review of tax exemptions is required, especially of income tax incentives. Government tax revenue can be increased by expanding the number of taxpayers and improving tax administration and compliance.

The report notes that higher spending on education and health, together with improving infrastructure, can if carefully designed create better social conditions and lead to higher economic growth rates.

The government is proceeding with measures to reduce non-performing loans and improve banking supervision and the IMF considers that lowering the costs of borrowing and improving access to credit will be important.

The IMF report considers that Tanzania must step up the implementation of reforms to the business environment by publishing an action plan with a timetable for implementation of measures including the rationalization of agencies, licenses and permits and removing non-tariff barriers to trade. Reforms should include investment in education and expansion of training and vocational programs.  A more flexible system of visas and work permits should be introduced for specialized foreign workers.