November 7, 2017 / 8:13 AM / a year ago

UPDATE 2-World Bank, finance minister cut Tanzania's 2017 growth forecast

(Adds government forecasts, more comments from World Bank)

By Fumbuka Ng’wanakilala

DAR ES SALAAM, Nov 7 (Reuters) - Tanzania’s economy is expected to expand by 7.1 percent in 2018, slightly up from an estimated 7.0 percent this year, its finance minister said on Tuesday, underpinned by faster expansion in communications, transport and construction sectors.

Finance and Planning Minister Philip Mpango further trimmed the government’s growth forecast for 2017 from 7.1 percent to 7.0 percent. The forecast had already been trimmed from 7.4 percent in May.

The East African nation has pledged to boost public investment in infrastructure, including a standard gauge railway, new roads and expanding its ports.

But some investors have been unnerved by some policies from the government of President John Magufuli, who is nicknamed “The Bulldozer” for his governing style.

“There appears to have been an overall deterioration in business sentiment due to the perceived risks resulting from the unpredictability of policy actions,” the World Bank said in its economic update on Tanzania released on Monday.

The bank cut its economic growth forecast to 6.6 percent this year from an earlier estimate of around 7 percent.

Mpango said the government planned to raise spending by 2.4 percent to 32.476 trillion shillings ($14.50 billion) in its 2018/19 (July-June) fiscal year budget, with a continued focus on public infrastructure investments and industrialisation of the economy.

“The government expects to borrow $600 million from external non-concessional lenders,” Mpango said in a presentation to parliament in the administrative capital Dodoma.

He also said annual headline inflation was expected to be contained at 5.0 percent in June 2018, from around 5.3 percent in June 2017.

Tanzania’s inflation stood at 5.3 percent year-on-year in September, up from 5.0 percent a month earlier. ($1 = 2,240.0000 Tanzanian shillings) (Reporting by Fumbuka Ng’wanakilala, Editing by Angus MacSwan)

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