Tanzania eyes 7% growth

Dar Es Salaam - Tanzania plans to raise spending by 17% in 2013/14 to 17.7 trillion shillings ($11bn) with a focus on infrastructure projects, and aims to lift growth to 7% in 2013.

The economy grew 6.9% in 2012 from 6.4% a year before, above the projected 6.8%, helped by transport and communications improvements and higher manufacturing output, Finance Minister William Mgimwa told a closed session of parliament on Monday.

The minister, whose presentation was seen by Reuters on Wednesday, also said the government aimed to reduce inflation to single digits. Prices rose 10.4% in the year to February.

East Africa's second-biggest economy, plagued by power cuts and other infrastructure challenges, is fast-becoming a regional energy hub following huge offshore natural gas discoveries. It plans to have a gas utilisation master plan in place in 2013/14.

The sectors that led growth in gross domestic product (GDP) in 2012 were communications which rose 20.6%, financial services rising 13.2%. Manufacturing rose 8.2% and construction 7.8%.

"The government plans to boost GDP growth to 7% in 2013, 7.2% in 2014, 7.5% in 2015 and 8.5% in 2017," the minister said.

The International Monetary Fund said in October that Tanzania needed to limit power outages to keep growth buoyant, predicting the economy would expand by 6.5 to 7% in 2012. It said growth was expected to "remain buoyant" in 2013.

"Priority in the government's 2013/14 budget will be in ... increasing availability of electricity, developing transport infrastructure...and strengthening information and communication technology," he said in the presentation.

Inflation falling

Tanzania signed several agreements with China during President Xi Jinping's visit this week for low-interest loans to build a new port and to develop a national information and communications technology network.

Mgimwa said the government planned to raise 9.88 trillion shillings in tax revenue in 2013/14, up from a targeted 8 trillion shillings a year before.

Loans and grants from external sources would fund a fifth of the total budget, or 3.85 trillion shillings. Commercial borrowing would raise 2.86 trillion shillings, with other income coming from non-tax revenue and revenue from local authorities.

Development expenditure will be 5.15 trillion shillings.

"The government will continue to curb the inflation rate and reduce it single digits," said Mgimwa, adding the government aimed to reduce it to 9.5% in June this year and to 6 percent in June 2014.

Inflation eased to 10.4% in the year to February from 10.9% in January. It has now fallen in 12 of the last 13 months.

The government is working on a draft national gas policy and plans new legislation this year to regulate the industry.

Norway's Statoil announced this month that it and BG were going ahead with plans to build a liquefied natural gas (LNG) terminal in Tanzania after Statoil made its third gas discovery in the region in a year. BG has said it sees potential for an LNG project from its Tanzania finds, but has not named a partner.