IMF sees Tanzania growth at 5.9pc despite Middle East spillovers

The International Monetary Fund (IMF) has maintained a positive outlook for Tanzania’s economic growth in 2026, projecting a 5.9% expansion despite global challenges linked to the Middle East conflict. During a recent mission led by Nicolas Blancher, the IMF team assessed the sixth and seventh reviews under the Extended Credit Facility (ECF) and the third and fourth reviews under the Resilience and Sustainability Facility (RSF). Successful completion of these reviews could release approximately $375.5 million in financing, pending IMF Executive Board approval. The IMF attributes Tanzania’s resilience to strong budget implementation and tax revenue performance, which safeguard social spending in health, education, and social protection. However, elevated oil and fertilizer prices, along with disruptions in global aviation and value chains, are expected to strain sectors like agriculture, tourism, and transport. Inflation is forecast to rise to 4.7%, while the current account deficit may widen to 2.9% of GDP due to these spillover effects. Blancher emphasized that a mildly stimulatory monetary policy remains appropriate as long as price stability is preserved. The IMF anticipates Tanzania’s medium-term growth potential at 6.3%, supported by mining, agriculture, and tourism, with inflation staying within the Bank of Tanzania’s target range of 3 to 5%. Gold price gains are projected to help keep the current account deficit below 3% of GDP, despite oil price volatility. External risks to Tanzania’s outlook include a global economic slowdown, trade fragmentation, geopolitical tensions, and reduced foreign development assistance. Domestically, fiscal pressures, social instability, and reform delays pose challenges. The IMF stressed the need for structural reforms, including expanding domestic revenue mobilization, improving public financial management, and reinforcing monetary institution independence. Key priorities for Tanzania’s long-term growth include enhancing the business and investment climate, addressing climate vulnerabilities through renewable energy investments, and scaling up social protection systems. The IMF mission engaged with Finance Minister Khamis Mussa Omar, Bank of Tanzania Governor Emmanuel Tutuba, and stakeholders to discuss these reforms, concluding that candid and constructive dialogue had taken place.