Press Release No. 04/18

Press Release: Statement by IMF Deputy Managing Director Agustín Carstens at the Conclusion of a Visit to Tanzania

February 3, 2004

International Monetary Fund (IMF) Deputy Managing Director Agustín Carstens made the following statement in Dar es Salaam today:

"This is my first visit to Tanzania as IMF Deputy Managing Director and it has provided me with a valuable opportunity to gain a closer understanding of the Tanzanian economy and to exchange views on domestic as well as regional economic issues with the country's leaders.

"I had the privilege of meeting with His Excellency President Benjamin Mkapa, as well as Finance Minister Basil Mramba, Central Bank Governor Daudi Ballali, and other senior officials. I also had the opportunity to hear the views of a distinguished group of ministers and senior officials from the region at a seminar on the IMF's role in low-income countries.

"As I said in my meeting with the President, I am greatly encouraged by Tanzania's economic achievements. The IMF has been closely involved with the Government's efforts from the outset with the key objective of promoting more rapid and broad-based economic growth that will benefit all of Tanzania's people and help them achieve the Millennium Development Goals. In the past few years, Tanzania has made substantial progress in establishing the macroeconomic stability and deepening the structural reforms that are needed for sustainable growth and poverty reduction. Real growth has nearly doubled and inflation has been significantly reduced since the mid-1990s, and the external debt position is now sustainable. I am proud to say that the IMF has supported Tanzania's efforts through lending, policy advice and technical assistance.

"Despite these achievements, much remains to be done if Tanzania is to increase growth and raise living standards. There was broad recognition in my meetings with Tanzania's leaders that at the heart of this challenge lie the need to mobilize domestic revenue so that Tanzania can strengthen domestic savings and over time reduce aid dependency, and the need to make public sector more supportive of a market economy. It is also important to strengthen agricultural and rural sector development; to promote increased and more effective social sector spending; and to address problems in the energy sector that could become a constraint on growth. Equally important is the need to strengthen institutions and private sector development, including by measures to improve the efficiency of the financial sector, and to remove regulatory and other impediments to investment. With regard to the financial sector, I look forward to the implementation of recommendations in the recently completed Financial Sector Assessment Program (FSAP) exercise. Finally, increased trade liberalization will help to provide the imports needed for faster growth and for spurring export diversification.

"Overall, I am optimistic that Tanzania, with sustained implementation of its economic reforms, can succeed in achieving its ambitious development goals. The IMF has been—and will continue to be—a strong supporter of the government's reform efforts not only financially but also with technical assistance. The AFRITAC East regional technical assistance center, recently established in Dar es Salaam can be an important vehicle for providing such technical assistance.

"The discussions at today's seminar on the role of the IMF in low-income countries will be very useful for our future work in this area. In my remarks to the seminar, I noted that recent improvements in the global economic outlook presented a window of opportunity for African countries to increase economic growth. I emphasized that the key to taking advantage of the improved international business climate is for governments to adopt sound policies that provide a stable, open, and market-driven setting in which small- and medium-sized enterprises can flourish. I will take back with me the stimulating suggestions from seminar participants as to how the IMF could make its policy advice more effective in engendering sustainable growth and reducing poverty in Africa. Participants emphasized the need for the IMF to be more flexible in its policy advice, particularly on budgets and to assist countries in effectively and efficiently absorbing the large amounts of aid that may become available in the coming years. They also emphasized the need for more regularity in the provision of aid by all donors."