COUNTRY REPORT Tanzania Comoros At a glance: 2001-02 OVERVIEW The ruling Chama Cha Mapinduzi (CCM) party was victorious in the mainland presidential and parliamentary elections held on October 29th. Voting was judged to have been peaceful and fair. However, the Zanzibar poll was chaotic, so much so that voting was annulled in 16 of the 50 constituencies. The Zanzibar Electoral Commission refused to rerun the entire election, but announced new voting in the 16 constituencies. Anti- government demonstrators clashed with riot police following the decision not to rerun the entire election, and opposition parties refused to participate in the partial rerun. Substantial real GDP growth is forecast during the outlook period, driven by strong growth in agriculture and expansion in the mining, manufacturing and tourism sectors. Exports and imports are both set to rise during the forecast period, with the current-account deficit narrowing between 2001 and 2002. Inflation is predicted to continue its downward trend. Key changes from last month Political outlook • The prospect of further violence is likely, as Zanzibar awaits the rerun of voting in the 16 constituencies where polling was annulled. Economic policy outlook • Economic policy continues to be led by the IMF poverty reduction and growth facility. Further privatisation of parastatals and other measures of liberalisation are envisaged, as are measures to attract foreign direct investment, particularly to the mining and minerals sectors. Economic forecast • Real GDP is forecast to grow by 5.7% in 2001, increasing to 6.3% in 2002. • Inflation will continue to fall, averaging 5.5% in 2001, declining to 5% in 2002. • The current-account deficit will be US$595m in 2001 and US$440m in November2002, equivalent 2000 to 7% of GDP and 5% of GDP, respectively. The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.20) 7499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: http://www.eiu.com Electronic delivery This publication can be viewed by subscribing online at http://store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office London: Jan Frost Tel: (44.20) 7830 1183 Fax: (44.20) 7830 1023 New York: Dante Cantu Tel: (1.212) 554 0643 Fax: (1.212) 586 1181 Hong Kong: Amy Ha Tel: (852) 2802 7288/2585 3888 Fax: (852) 2802 7720/7638 Copyright © 2000 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 0969-6776 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Contents 3 Summary Tanzania 5 Political structure 6 Economic structure 6 Annual indicators 7 Quarterly indicators 8 Outlook for 2001-02 8 Political outlook 9 Economic policy outlook 10 Economic forecast 12 The political scene 17 Economic policy 18 The domestic economy 18 Economic trends 18 Agriculture 20 Energy and industry 21 Mining 22 Transport and infrastructure 23 Financial services 24 Foreign trade and payments Comoros 26 Political structure 27 Economic structure 27 Annual indicators 28 Quarterly indicators 29 Outlook for 2001-02 29 Political outlook 30 The political scene 33 Economic policy and the domestic economy 36 Foreign trade and payments List of tables 10 Tanzania: international assumptions summary 11 Tanzania: forecast summary 13 Tanzania: election candidates and parties, 2000 34 Comoros: selected economic indicators EIU Country Report November 2000 © The Economist Intelligence Unit Limited 2000 2 34 Comoros: gross domestic product by sector 35 Comoros: public finances 36 Comoros: balance of payments 37 Comoros: value of principal exports 37 Comoros: value of principal imports List of figures 12 Tanzania: gross domestic product 12 Tanzania: Tanzanian shilling real exchange rates 19 Tanzania: tea production 20 Tanzania: six offshore oil license areas 21 Tanzania: cashew nut production 21 Tanzania: gold production 25 Tanzania: tourist arrivals 28 Comoros: foreign trade 28 Comoros: foreign reserves 30 Comoros: gross domestic product 30 Comoros: Comorian franc real exchange rates EIU Country Report November 2000 © The Economist Intelligence Unit Limited 2000 3 Summary November 2000 Tanzania Outlook for 2001-02 As predicted, the ruling Chama Cha Mapinduzi (CCM) party won landslide victories in the presidential and parliamentary elections on mainland Tanzania. However, chaos in the Zanzibar elections, and the subsequent annulment of voting in 16 constituencies, poses a serious threat to governance of the island. The president, Benjamin Mkapa, announced a rerun of the election in the 16 constituencies, but the Civic United Front (CUF) opposition called for the entire poll to be carried out again, and stated that it would boycott any partial rerun on Zanzibar. It is highly unlikely that the CUF will accept the result of the rerun poll, and political violence is a strong possibility. Real GDP growth is forecast to be 5.7% in 2001 and 6.3% in 2002, driven by strong agricultural performance, increased gold production and investment in tourism and gas production. Inflation will continue falling and is forecast at 5.5% in 2001 and 5% in 2002. Exports and imports will grow during the outlook period and the trade account will remain in deficit. The current- account deficit is forecast at US$595 in 2001 and US$440 in 2002. The stability of the Tanzanian shilling will be buoyed by strong donor inflows and increased exports during 2001, but will depreciate at a faster rate in 2002 as the currency becomes increasingly overvalued. The EIU forecasts an annual average of TSh841:US$1 in 2001 and TSh901:US$1 in 2002. The political scene Mr Mkapa’s reaction to the Zanzibar crisis may well be the defining feature of his second term in office, establishing him either as a creditable leader or as little more than a “lame duck”. After the rerunning of the elections in the 16 annulled constituencies, and the subsequent victory of the CCM candidate, Amani Karume, opposition parties stated that they would recognise neither Mr Mkapa’s nor Mr Karume’s presidency, and diplomats from the international community boycotted Mr Karume’s inauguration ceremony. Violent protests, perhaps to the point where Zanzibar becomes ungovernable, present a significant risk for the future. Economic policy Economic policy during the outlook period will be driven by the country’s commitments under the IMF’s poverty reduction and growth facility. The government is also keen to boost the already high levels of foreign direct investment, particularly in the mineral and fossil fuel sectors. Measures to encourage investment include attractive licensing terms and the absence of “signature bonus” payments for investors. The domestic economy The Tanzanian economy has experienced relatively strong real GDP growth during 2000 and this is set to continue during the outlook period. GDP growth is forecast at 5.7% in 2001, increasing to 6.3% in 2002. EIU Country Report November 2000 © The Economist Intelligence Unit Limited 2000 4 Foreign trade and Exports are set to rise over the forecast period because of a recovery in trad- payments itional commodity exports, particularly coffee and cotton. Strong GDP growth will lead to an increase in imports. The current-account deficit is predicted to be US$595 in 2001, narrowing to US$440 in 2002. Comoros Outlook for 2001-02 Colonel Azali Assoumane, the country’s military leader, and Colonel Said Abed, its secessionist leader, both face mounting opposition to their signing—on August 26th—of the Fomboni accord. The accord proposes a new confederal entity, sharing a common defence and foreign policy, and the establishment of a joint committee to develop a new constitution and the structure of new federal institutions, to be put to referendum by February 2002. Opponents of the accord have suffered severe penalties. The Organisation of African Unity has signalled its disapproval of the accord and has urged the international community to avoid supporting the agreement. Economic policy and the Following a two-year suspension owing to government disruption and political economy turmoil, the IMF concluded Article IV Consultations with Comoros in July. The IMF noted that the Comoran economy has remained weak, and pointed to weakness in the implementation of macroeconomic and structural policies, together with a deteriorating external environment, as the cause.