Posted on June 2, 2009 - by Gavin

Govt scales economic growth projection to 5 p.c…

The Citizen

The economy will grow by 5 per cent this year, two per cent down from the 7.4 per cent in 2008, the minister for Finance and Economic Affairs, Mr Mustafa Mkulo, said in Dar es Salaam yesterday.

The Government had in April projected that the economy will grow by 6 per cent in 2009, down from the 7 per cent in 2008/09.

Presenting the state of the economy summary to the members of the Parliamentary Committee on Finance and Economy in Dar es Salaam yesterday, ahead of the tabling of the national budget later this month, Mr Mkulo said the revision of the economic growth projections were taken in consideration to the global economic downturn effects to Tanzania.

“Our macro-economic policy targets show that growth on various sectors will decline in 2009, but pick up again later in 2010,” he said.

Members of the committee were, however, not impressed by the minister’s explanation on local economic downturn.

“Mr minister you should have come here to tell us what the Government was doing to ensure the local economy is not going to be so badly shaken, instead of just informing us that it will actually be shaken,” Mr Siraju Juma Kaboyonga (Tabora Urban-CCM) said.

During the time of crisis, it is important to take great caution and extraordinary measures to ensure important sectors such as agriculture, grew in order to propel general growth, Mr Kaboyonga said, adding that only steady growth of about 10 per cent would take the country forward in the fight against poverty, and not 5 per cent growth.

“We really need detailed explanation on the two per cent drop in economic growth from 7.4 per cent to 5 per cent. The global crisis justification is not enough,” Dr Abdallah Kigoda, chairman of the committee and MP for Handeni, said.

He also queried the drop in the growth of the minerals and quarries sector from 10.7 per cent in 2007, to 2.5 per cent in 2008 as well as the drop in the growth of the electricity and gas sector from 10.9 per cent in 2007, to 5.4 per cent in 2008.

Dr Kigoda asked the Government to take extra precautions and measures to ensure the global crisis does not shake the country’s economy to derail it from its policy targets and poverty reduction endeavours.

Dr Kigoda said it is possible for Tanzania to come out stronger economically after the crisis, if right decisions and actions are made and implemented.

Some of these actions include empowering the people through microfinance to enable them undertake commercial activities in areas such as agriculture, livestock keeping, and small mining activities and small businesses.

All MPs who spoke yesterday urged the Government to give due attention to agriculture, including compelling banks to lend to the sector.

They said interest rates in are unfairly high, while deposit rates were too low to for meaningful returns of savings.

Mr Kaboyonga advised the Government to float long term bonds to fund the proposed agricultural bank. He also urged the Bank of Tanzania to create regulations that will force banks to use at least 10 per cent of their profits as corporate social responsibility to financing the agricultural sector.

Source: http://thecitizen.co.tz/newe.php?id=12846