“The mission welcomed the authorities’ readiness to moderately tighten monetary policy to meet their inflation objective of 7.0 per cent by end- 2013,” IMF said after completing its mission in the country last week. The mission statement said inflation has continued to fall, “albeit more slowly than envisaged”, and is projected to be in the single digits by mid-2013.
The Fund said economic policy aims at further moderating inflation, preserving a sustainable debt outlook, and increasing foreign reserves, which will be facilitated by further enhancing exchange rate flexibility. The National Bureau of Statistics (NBS) is expected to announce the February inflation figure today (Friday) which will paint the picture of whether the authorities’ projection is attainable. However, in January the inflation rate dropped to 10.9 per cent from 12.1 per cent of last December, but economists urged that the declining tempo was very slow.
The declining tempo was termed as good but was going down at snail’s pace compared to other four East African partner states that reached below five per cent. Going by data face value and visualisation for the three East African states, it shows Dar es Salaam inflation for the last one year dropped by 8.8 per cent from 19.7 of last January to 10.9 per cent of this January, which is less than one per cent curbing rate per month.
On the other hand at the beginning of last year, Kenya’s inflation rate was 18.9 per cent and Uganda 25.68 per cent, while Tanzania stood at 19.8 per cent but pronounced actions lowered the former rate faster than the latter. However, at the end of last December, Nairobi and Kampala reduced the inflation rates to 3.2 per cent and 5.5 per cent respectively compared to 12.1 per cent of Dar es Salaam.
The Mzumbe University’s Dar es Salaam Business School Senior Lecturer (Economics), Dr Honest Ngowi, told the ‘Daily News’ earlier that: “The decline is good but rather at a snail’s pace. According to Dr Ngowi, the problem of the country’s inflation is structural issues blended by monetary matters that hinder the fast curbing pace of bringing to equilibrium Consumer Price Index.
“Much has to be done to address the structural issues as well as monetary issues that are responsible for rather disturbing inflation movements in Tanzania,” the lecturer said.