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Tanzania sees solid 2012 GDP growth, has Eurobond in mind

11th May 2012
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Bank of Tanzania governor Benno Ndulu

Bank of Tanzania governor Benno Ndulu has said the country’s economy is expected to grow by as much as 7 per cent this year, faster than 6.4 per cent last year.

He said this here yesterday on the sidelines of the World Economic Forum on Africa, noting that the country faces fewer problems with power shortages.

Prof Ndulu said the country had revived dormant plans for a Eurobond to help with its infrastructure spending, although the amount and timing of the issuance had yet to be decided.

“The number of problems that we had with power, et cetera, are not of the same magnitude,” he said, adding: “For this year, between 6.6 to 7 per cent (growth)... we have worked on the numbers.”

Earlier this week, National Bureau of Statistics said frequent power blackouts caused economic growth to slow to 6.5 per cent in the fourth quarter of last year from 6.7 per cent a year earlier.

Power output fell by 22 per cent in the third quarter of last year, due partly to low water levels in hydroelectric reservoirs.

Economic analysts say increasing investor interest in Tanzania’s telecommunications, energy and financial services sectors should help drive economic growth if the world economy recovers.

The country is attracting a lot of investor attention to its natural gas deposits, whose reserves the government says stand at more than 10 trillion cubic feet following recent discoveries.

Tanzania is Africa’s fourth-largest gold producer and its mining sector has attracted major investment over the past decade.

The International Monetary Fund said in March it expects the country’s economy to expand by 6.5 to 7 per cent in 2012-13.

Prof Ndulu said the country had revived its plan to issue a Eurobond although he gave few details, adding: “Even the amount has to be determined... We have to first complete the country rating. After we have done the country rating, we have to do the usual road show and marketing.”

Earlier this year, the government said it planned to start opening up its capital account this year, enabling it to attract more investment initially from other members of the five-partner East African Community and then from the rest of the world by 2015.

The BoT governor also pointed out that the country was gradually working on relaxing its capital controls in order to gain its sovereign debt rating.

“We are working on that. We have made a commitment under the East African market protocol and we’re going to keep to those commitments,” he said, adding: “We’re going to gradually remove most of those, but we’re aware that every country now works with speed bumps just because currencies have become so volatile.”

REUTERS

SOURCE: THE GUARDIAN
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