| DAR ES SALAAM, April 11
DAR ES SALAAM, April 11 Uncertainty over
government policies and a slowdown in the private sector cut
Tanzania's gross domestic product growth to an estimated 6.9
percent in 2016 from 7.2 percent the previous year, the World
Bank said on Tuesday.
Growth is still supported by substantial government
investment in infrastructure, including a standard gauge
railway, new roads and expanding the ports.
But investors have been unnerved by unpredictable policies
from the government of President John Magufuli, nicknamed "The
Bulldozer" for his pugnacious governing style. A steep drop in
money supply and a spike in non-performing loans have also
hampered private sector credit growth.
"Policy adjustments, if they occur frequently, could cause
uncertainty for the private sector, and this uncertainty could
dampen private sector investment decisions," the World Bank said
in its latest economic update for Tanzania.
"The government should pay more attention to, and be more
explicit about, the potential unintended consequences of
government policies on the private sector."
It said Tanzania's economic growth in 2016 probably slowed
to 6.9 percent, slightly below the government forecast of 7.2
percent. Government officials were not immediately available for
Tanzanian banks have tried to shield themselves against a
steep rise in non-performing loans by creating a large buffer in
the form of high interest rates, increasing the cost of
borrowing, it said.
The World Bank said government cost-cutting measures,
including restricting travel for officials, could hurt the
"Government meetings in tourist resorts have been banned -
an example of how public administration reforms could also
impact the private sector, which relies significantly on
government demand," it said.
After coming into office in November 2015, Magufuli launched
a crackdown on tax evasion targeting large companies. Some
foreign investors say they could now scale back operations or
expansion plans because of tougher demands placed on firms,
including higher tax bills.
"The negative business sentiment indicators point to the
need for the government to promptly engage in public-private
dialogue on investment climate," the bank said.
(editing by Katharine Houreld/Jeremy Gaunt)