Tanzania’s inflation will return to single-digit come June-Kikwete

BY BUSINESS REPORTER

PRESIDENT Jakaya Kikwete is optimistic that Tanzania’s inflation rate will fall to single digits come June this year from 19.2 percent that was recorded in November last year.

The country’s inflation rate has been on the upscale for the last seven months that has been driven by higher food and fuel prices but the president still believes the country’s economic outlook is still positive.

According to a statement released yesterday, “Tanzania’s economy will grow at around 7 percent and that inflation will be brought down to single digits by June, 2012,".

Chronic power shortages compounded the country's problems against a backdrop of sluggish global recovery and the euro debt crisis.

"Inflation rose from 5.6 percent in December 2010 to 19.2 percent in November 2011 ... we have daunting challenges to contend with this year," he said.

"I am confident, however, that with the plans and programmes we intend to initiate and, if we get the support of partners and friends of Tanzania, we should be able to rise to the challenges and prevail."

Kikwete in a statement said power supply had stabilised after a period of prolonged rolling blackouts, with the government now eyeing long-term solutions to energy shortages.

The International Monetary Fund (IMF) said in November Tanzania's growth in 2011 may exceed the 6 percent forecast earlier due to the strong performance of its telecommunications, construction and financial services sectors.

The IMF cut its 2011 growth forecast for Tanzania to 6 percent from 7.2 percent in March, saying frequent power outages would hurt output while food and fuel prices could push inflation higher.

Tanzania's statistics office is on Monday expected to release figures for the year-on-year inflation rate for December, with analysts expecting it to reach 20 percent on rising food and fuel prices.

Kikwete said Tanzania would improve the business climate in 2012 to boost investments and continue to implement reforms aimed at developing the country to a middle-income nation by 2025.