Tanzania cut its economic growth forecast for this year to 7.3 percent and postponed plans to sell its first sovereign bond as the global financial crisis curbs demand for its exports and pushes up borrowing costs.
The 2009 growth estimate was lowered from 8 percent, President Jakaya Kikwete said in an end-of-year speech to the nation, a copy of which was e-mailed today. The economy probably grew 7.7 percent in 2008, down from a previous forecast of 7.8 percent, he added.
Tanzania is Africa’s third-largest gold producer, after South Africa and Ghana. About 42 percent of the east African nation’s exports are comprised of minerals, mainly gold, diamonds and tanzanite, a rare gemstone only found over a five- kilometer (3.1 mile) strip near the foot of Mount Kilimanjaro.
“Because of the global financial crisis, some of our economic growth targets have been affected,” Kikwete said. “Overall, the economy of our country in 2008 grew at an impressive rate. But it would have grown more if the global economy had not experienced problems.”
Tanzania’s economy has benefited from increased foreign investment after the International Monetary Fund and other creditors canceled most of the nation’s debt in 2006. The IMF forecasts the country’s economy will expand 8 percent this year, compared with an estimated 7.5 percent in 2008.
Kikwete said the government will delay plans to sell its first sovereign bond as the global credit crunch pushed up borrowing costs.
Postponed Bond Issue
The east African nation had planned to issue a Eurobond worth at least $500 million by the end of the year to help improve the country’s transport infrastructure, Mugisha Kamugisha, commissioner for policy analysis in the finance ministry, said in November.
“The international financial turmoil has forced us to postpone our plans to raise funds using sovereign bonds to build our major roads,” Kikwete said. “It is my hope that when conditions improve, we will examine this plan afresh.”
This year, the government will focus on improving the supply of food and other basic goods, and boosting tourism, he said.
The number of tourists to Tanzania probably declined 18 percent last year, and the government plans to develop new markets in the Middle East and Asia, he added.
Investment in agriculture will help to improve self- sufficiency in food supply while boosting foreign currency earnings from exports, Kikwete said.