The overall assessment suggests a positive economic outlook with satisfactory growth, stable inflation, and prudent monetary and fiscal policies contributing to stability in various sectors, although there are challenges such as the depreciation of the exchange rate.

Monetary Policy Stance:

• The MPC has maintained a less accommodative monetary policy to contain inflation below the target of 5 percent. The policy aims to support economic activities and financial sector stability.

Economic Performance:

• The global shocks have had spillover effects, but the economy's performance in 2023 is considered satisfactory.
• Growth in the first and second quarters of 2023 was 5.4 percent and 5.2 percent, respectively.
• Economic activities in Zanzibar showed recovery, with growth reaching 5 percent in the second quarter and an expected annual target of 7.1 percent in 2023.

Inflation:

• Inflationary pressures have remained muted, evolving below the target of 5 percent.
• Inflation declined to 3.2 percent in October and November 2023, primarily driven by moderation in food prices.
• In both Mainland Tanzania and Zanzibar, inflation is expected to remain stable and consistent with the medium-term target of 5 percent.

Monetary Aggregates:

• The growth of monetary aggregates slowed in November 2023 due to a less accommodative monetary policy.
• Extended broad money supply grew at 13.7 percent, and private sector credit growth slowed to 18.3 percent, but it was still above the projection for the end of December 2023.

Fiscal Performance:

• Fiscal performance was satisfactory, with revenue reaching 96 percent of the target in the first four months of 2023/24.
• Expenditure was aligned with available resources.

Current Account and Foreign Reserves:

• The current account improved slightly, with a narrowed deficit in the year ending October 2023.
• Foreign exchange reserves remained adequate at about USD 5 billion in November 2023, covering more than 4 months of imports.

Exchange Rate and Liquidity:

• The exchange rate depreciated by around 7.8 percent year-on-year, reflecting a shortage of foreign currency liquidity.

Financial Sector Stability:

• The financial sector remained stable, with the banking sector adequately capitalized and liquid.
• Asset quality improved, as reflected by a decline in non-performing loans.

Government and IMF Support:

• The MPC applauded the government's policies to address the shortage of foreign currency, increase export, and implement import substitution.
• Satisfactory implementation of policies and achievement of targets outlined in national economic programs, including the IMF-supported Extended Credit Facility, were acknowledged.

Tanzania's economic advantages for growth include a diversified economy, private sector investment, export and tourism growth, fiscal prudence, moderate inflation, a stable financial sector, improvements in the current account, and supportive government policies with international support from organizations like the IMF. These factors collectively contribute to a positive economic environment and the potential for sustained growth.

1. Diversified Economic Activities:

The diversified nature of economic activities has contributed to sustained growth, with different sectors playing a role in supporting overall economic development.

2. Private Sector Investment:

Increased private sector investment has been highlighted as a positive factor in economic growth, with the implementation of growth-enhancing policies fostering a favorable environment for private investment.

3. Export and Tourism Growth:

An improvement in proceeds from exports and tourism has positively impacted economic growth, reducing pressure on foreign currency demand. This suggests that external sectors are contributing to the country's economic expansion.

4. Satisfactory Fiscal Performance:

Satisfactory fiscal performance, with revenue reaching 96 percent of the target and expenditure aligned with available resources, indicates prudent fiscal management, contributing to economic stability.

5. Moderate Inflation:

The effective coordination of monetary, fiscal, and structural policies has resulted in moderate inflation, below the target of 5 percent. This stability in prices provides a conducive environment for economic activities and investments.

6. Stable Financial Sector:

The stable financial sector, with well-capitalized and liquid banks, contributes to economic growth by facilitating access to credit and supporting investment activities.

7. Current Account Improvement:

The slight improvement in the current account, driven by increased foreign exchange earnings from traditional export crops and tourism, contributes to a more balanced external position, enhancing economic resilience.

8. Foreign Exchange Reserves:

Adequate foreign exchange reserves at about USD 5 billion provide a buffer against external shocks, ensuring the stability of the country's currency and supporting international trade.

9. Government Policies and IMF Support:

The effective implementation of government policies, including measures to address the shortage of foreign currency and promote export and import substitution, contributes positively to economic growth.

Acknowledgment of satisfactory implementation of policies and achievement of targets outlined in national economic programs, including support from the IMF, reflects a commitment to economic reforms and stability.

10. Positive Economic Outlook:

The positive outlook for economic growth, with expectations that the performance in 2023 may surpass projections, indicates confidence in the overall economic trajectory.