TANZANIA: BE OPEN IN NATURAL GAS INCOME ADVISES IMF

Tanzania will start benefiting from potential natural gas revenues in the next few years but the International Monetary Fund (IMF) wants the country to spend the money transparently.

The international lender reiterated -- in a statement to announce a new three-year Policy Support Instrument (PSI) for Tanzania yesterday -- its position to see the country creating a framework to manage its natural resource worth.

“Tanzania stands to benefit from potential revenues from offshore extraction of natural gas, likely to start in the early 2020s. The IMF Executive Board stressed the need for a comprehensive framework to manage natural resource wealth. Such a framework should ensure full integration of resource revenues in the budget, and institutionalise the transparency and accountability of spending decisions,” reads a statement in the statement.

The PSI is IMF’s programme offered to low-income countries that do not want—or need— the Fund’s financial assistance. It is a flexible tool that enables countries to secure IMF’s advice and support without a borrowing arrangement thereby helping countries to design effective economic programmes that deliver clear signals to donors, multilateral development banks, and markets of the Fund’s endorsement of the strength of a member’s policies. This comes at a time when latest figures put Tanzania’s natural gas finds at 51 trillion cubic feet. It also comes at a time when some quarters within the community are questioning the level at which Tanzania’s interests have been protected under the Production Sharing Agreements (PSAs) signed between the state-owned Tanzania Petroleum Development Corporation and some multinational firms.

In a January 2014 interview with The Citizen in Dar es Salaam, the deputy director for the IMF’s African Department, Dr Rodger Nord, said poorly managed, natural resources could be a curse rather than a blessing. Overall, the IMF said Tanzania is expected to sustain its recent positive macroeconomic performance over the medium term.

This, the IMF says, will lead to a gradual reduction relative to the country’s Gross Domestic Product (GDP) which is currently characterised by a large current account deficit.

The position outlook will however depend on authorities’ intention to undertake further reforms to improve the investment climate and diversify the economic base.

“The current budget appropriately targets a smaller deficit than in the previous fiscal year. Going forward, the authorities will need to continue the fiscal adjustment underway while opening up room for badly needed spending on infrastructure and social services,” reads the statement.