Aid delays in graft row threaten Dar outlook - IMF

DAR ES SALAAM: Delays in aid disbursements over graft allegations in the energy sector and revenue shortfalls risk undermining Tanzania’s sturdy economic growth, the International Monetary Fund (IMF) said on Thursday.

The IMF said Tanzanian growth was expected to be seven per cent this year with inflation in mid-single digits, in line with a government target of 5 percent by June. Inflation was 4.8 per cent in December.

“Performance ... was satisfactory through June, but has deteriorated since and risks have risen, stemming from delays in disbursements of donor assistance and external non-concessional borrowing, and shortfalls in domestic revenues,” it said.

A group of 12 donors have said they will only pay outstanding budget support pledges worth nearly $500 million (Sh45 billion) after Tanzania takes appropriate action against corruption.

Members of parliament have accused senior government officials of fraud and corruption in the transfer of at least $122 million of public funds to a private company.

The funds came from an escrow account held jointly by state power company Tanesco and independent firm IPTL and went to IPTL’s owner, Pan Africa Power, in 2013. Officials said there was no wrongdoing and PAP said the payment was legal.

“It will be critical to the business environment to address the governance issues raised by the IPTL case, which would also unlock donor assistance,” the IMF said. Tanzania is estimated to have 53.2 trillion cubic feet of gas reserves off its coast but plans for a major export terminal are making slow progress.

IMF also advised the Tanzanian government to “comprehensively and forcefully” address the accumulation of domestic payment arrears, particularly with pension funds.

Over the past six years, Tanzania has fallen 17 places to 119 in a global ranking of perceived official corruption compiled by the anti-graft organisation Transparency International. Number one is considered the least corrupt.