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Tanzania at a Glance: 2005-06

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Tanzania at a Glance: 2005-06 Country Report Tanzania Tanzania at a glance: 2005-06 OVERVIEW The Economist Intelligence Unit expects the ruling party, Chama Cha Mapinduzi (CCM), to win overwhelming victories in the presidential and parliamentary elections, which are due to be held in late 2005. More important will be the election of the CCM!s presidential candidate, which is to take place during the CCM!s national party congress in April 2005"the president, Benjamin Mkapa, cannot stand for a third term under the current constitution. We expe ct t he CCM!s presidential nominee to be a compromise candidate between the progressive and conservative factions. Assuming favourable weather, annual real GDP growth is forecast to be around 6% in 2005-06, as a slowdown in mining sector activities and institutional capacity constraints will prevent higher growth. Improved harvests should lower food prices and ongoing fiscal and monetary improvements should help to bring inflation down to an average of 4% in 2005-06. The current-account deficit is forecast to remain broadly unchanged, at around 3.7% of GDP, in 2005-06, as higher exports and rising services credits will be offset by increased imports and profit remittances. Key changes from last month Political outlook • There have been no major changes to our political forecast in the last month. Economic policy outlook • Prospects for economic policy remain unchanged since last month. Economic forecast • There have been no major changes to our economic forecast in the last month. February 2005 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 Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. 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 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.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 Copyright © 2005 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 Economist Intelligence Unit 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 Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Tanzania 1 Contents Tanzania 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2005-06 7 Political outlook 8 Economic policy outlook 10 Economic forecast 13 The political scene 18 Economic policy 21 The domestic economy 21 Economic trends 23 Agriculture 25 Manufacturing 26 Infrastructure 30 Other services 30 Foreign trade and payments List of tables 10 International assumptions summary 12 Forecast summary 18 Interest rates in Tanzania 22 New consumer price index weights 23 Government budget, 2003/04 24 Sisal production 25 Cotton production 30 Tourism in Tanzania List of figures 13 Gross domestic product 13 Consumer price inflation 21 Exchange rate, 2004 Country Report February 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 Tanzania 3 Tanzania February 2005 Summary Outlook for 2005-06 The Economist Intelligence Unit expects the ruling party, Chama Cha Mapinduzi (CCM), to win overwhelming victories in the presidential and parliamentary elections, which are due to be held in late 2005. More important will be the election of the CCM!s presidential candidate, which is to take place during the CCM!s national party congress in April 2005"the president, Benjamin Mkapa, cannot stand for a third term under the current constitution. We expect the CCM!s presidential nominee to be a compromise candidate between the progressive and conservative factions. Assuming favourable weather, annual real GDP growth is forecast to be around 6% in 2005-06, as a slowdown in mining sector activities and institutional capacity constraints will prevent higher growth. Improved harvests should lower food prices and ongoing fiscal and monetary improvements should help inflation fall to an average of 4% in 2005-06. The current-account deficit is forecast to remain broadly unchanged, at around 3.7% of GDP, in 2005-06, as higher exports and rising services credits will be offset by increased imports and profit remittances. The political scene Some instances of violence between police and opposition supporters were reported during local elections on the mainland in late November, and violence was also a problem during registration exercises on Zanzibar at the same time. The nature of the problems on Zanzibar indicate that a peaceful election may not resolve the situation. Constitutional amendments are planned to change the line of succession in case of presidential death or incapacitation. There have been signs that the government may seek to amend the Political Parties Registration Act to cut down on the number of extremely small parties. Economic policy The Bank of Tanzania continued to tighten monetary policy in the second half of 2004 to keep inflationary pressures down; the discount rate ended the year at around 14.5%. A variety of problems have delayed efforts to distribute anti- retroviral drugs in the country. Low-level corruption has come under the spotlight following the publication of a new booklet highlighting the problem. The domestic economy The Tanzanian shilling has remained stable against a weak US dollar. Inflation remains low, but the picture has been obscured by the introduction of a new basket of goods that make up the consumer price index. Poor rains have hurt prospects for the 2005 harvest and reduced hydroelectric power generation. Foreign trade and payments As a form of external debt relief, the UK has agreed that in 2005 it will pay 10% of Tanzania!s debt service to its multilateral creditors, including the IMF, the World Bank and the African Development Bank. The EAC customs union has been officially launched, but non-tariff barriers to trade remain a concern. Editors: Christopher Eads (editor); Pratibha Thaker (consulting editor) Editorial closing date: February 4th 2005 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report February 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 4 Tanzania Political structure Official name United Republic of Tanzania Form of state Republic, formed by the 1964 union of Tanganyika and Zanzibar Legal system Based on English common law, the 1977 union and 1985 Zanzibar constitutions, as amended National legislature National Assembly, comprising 295 members (231 directly elected on the mainland; five delegates from the Zanzibar parliament; the rest appointed); Zanzibar!s House of Representatives (59 members, including 9 women appointees) legislates on internal matters National elections October 2000 (legislative and presidential); next elections due in October 2005 (legislative and presidential) Head of state President, elected by universal adult suffrage every five years National government The president, vice-president and Council of Ministers; cabinet last reshuffled October 2000 Main political parties Chama Cha Mapinduzi (CCM); Civic United Front (CUF); National Convention for Construction and Reform (NCCR-Mageuzi); United Democratic Party (UDP); Chama Cha Demokrasia na Maendeleo (Chadema) President Benjamin Mkapa Vice-president Ali Mohamed Shein Prime minister Frederick Sumaye Key ministers Communications & transport Mark Mwandosya Community development, women's affairs & children Asha Rose Migiro Defence Philemon Sarungi Education Joseph Mungai Energy & mineral resources Daniel Yona Finance Basil Mramba Food & agriculture Charles Keenja Foreign affairs Jakaya Kikwete Health Anna Abdallah Home affairs Ramadhan Mapuri Industry & trade Juma Ngasongwa Justice & constitutional affairs Harith Bakari Mwapachu Labour & youth development Juma Kapuya Lands & human settlement development Gideon Cheyo Natural resources
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