UNITED REPUBLIC OF TANZANIA A. Ove1~11 economic performance since 1980

The United Republic of Tanzania has been in the grip of a severe economic crisis during most of the 1970s, which worsened considerably since 1979. During the period 1980-1984, the GDP rate of growth at constant prices averaged to

only 0.6 per cent yearly while per capita GDP declined at an average annual rate of 2.5 per cent. The economy also suffered from high rates of inflation, ranging between 25-36 per cent per annum during 1982-1984; huge fiscal deficits;

and a serious balance-of-payments situation. Four years of drought, the two oil shocks, the break-up of the East African Community, the collapse in commodity prices and the rise in the prices of essential imports, falling production in agriculture and industry, acute foreign exchange constraints, rapid monetary expansion and deteriorated capital stock and infrastructure have combined to cause this crisis.

Tanzania's external debt stood at $2.6 billion at the end of 1984, of which

$0.8 billion was non-concessional. This represents a ratio of debt to GDP of 64 per cent and of debt to exports of 603 per cent. The actual debt-service ratio was 30 per cent. Arrears on debt have started to appear and the ratio of total debt-service obligations to exports is approaching 70 per cent. Net resource flows fell sharply from $515 million in 1980 to $280.7 million in 1981, and although they rose steadily thereafter their level in 1984 was only 74 per cent that of 1980.

In June 1982, the Government adopted a comprehensive Structural Adjustment Programme (SAP) aimed at dealing with the country's serious structural problems and rehabilitating the economy. The overall implementation of SAP, carried out through the financial year 1984/1985, met with a limited success and the impact of adjustment measures on the economy was modest.

B. Main areas of focus of the national recovery programme (1986-1990)

Within the framework of the 1986/1987 - 1988/1989 programme for economic recovery the following areas will receive priority: increasing output of food and export crops; rehabilitating the physical infrastructure in support of direct productive activity; and increasing capacity utilization in industry.

C. Highlights of policy reforms in support of the national recovery programme 0986-1990 )

Policy reforms undertaken or planned include:

(a) Putting more emphasis on food and cash crop production by increasing the share of agriculture in the budget to 28.4 per cent, increasing producer prices from 46 to 55 per cent nominally and introducing other incentive measures;

(b) Adopting an austerity programme which reduced development expenditure and new investment to the minimum;

(c) Rationalization of price controls;

(d) Expanding the role of the private sector;

(e) Improving the efficiency of parastatals; and

(f) Mobilization of additional resources and curtailment of governmen1 expenditure.

D. Estimates of resource requirements for the national recovery programme (1986-1990)

Millions of US dollars (i) Resources already mobilized

Domestically Externally

Subtotal

(ii) Resources planned to be mobilized Domestically

Externally Subtotal

(iii) Estimates of likely available resources (iv) Total estimated cost of programme

(v) Resource gap

823.0 148.0

971.0 3 484.0

664.0

4 148.0 5 119.0 5 832.0 713.0

E. Estimates of debt-servicing requirements (1986-1990) (in millions of US dollars)

Type of debt

Interest Principal

Total

Official creditors 229.5

714.4 943.9

47. ZAIRE

Private creditors 53.3

208.2 261.5

Total 282.8 922.6 1 205.4

km 2

,

1980 few

A. Overall economic performance since 1980

With a population of 29.8 million inhabitants and an area of 2,345,000 Zaire recorded an average GDP growth rate of 1. 3 per cent yearly between and 1985. The purchasing power of the population has declined in the past years mostly because of:

(a) The slackening of domestic supply of goods and services following the breakdown of basic infrastructure and the production system;

(b) The adverse effects of galloping inflation; and

(c) Through its austerity programme for economic stabilization launched in 1983. Zaire has achieved a basic equilibrium in several respects. brought inflation down from 100 to 20 per cent. improved the management of public finance and made serious efforts to meet its external debt obligations.

Zaire has a heavy burden of external debt; at the end of 1984 it owed $4.6 billion broken down as follows: $1.57 billion on concessional terms and $3.58 billion on non-concessional terms. The ratio of debt-service to export earnings shows the following trends: 14.9 per cent in 1980, 13.8 per cent in 1981. 11.9 per cent in 1983 and 14.9 per cent in 1984.

The net inflow of external resources is steadily declining essentially because of the continuous fall in ODA. Net resource flows amounted to $344.6 million in 1980. $412.7 million in 1981. $168.7 million in 1982. $128.2 million in 1983 and $256.9 million in 1984. aDA declined continuously from $846.2 million in 1980 to $684.9 million in 1981. to $398.7 million in 1982. to $334.8 million in 1983 and to $238.0 million in 1984.

B. Main areas of focus of the national recovery programme (1986-1990)

To give a definitive thrust to its economy. Zaire has prepared its first Five-Year Plan (1986-1990) whose objectives fit into the framework of Africa' s Priority Programme for Economic Recovery. The main elements are as follows:

(a) Agriculture: Rehabilitation of the production system. control of the food cr181S, development of water resources, prevention of food losses, liberalization of prices with a view to encouraging farmers to increase supply, etc. ;

(b) Infrastructure: Rehabilitation of roads particularly in the rural areas and posts and telecommunications and expansion of existing capacity;

(c) Health: Rehabilitation of hospitals and clinics (especially in the rural areas), expansion of the capacity of rural and urban infrastructure. the objectives of the 1986-1990 five-year plan being to provide basic health care for every citizen by the year 1990 through the establishment of a large number of health centres; and

(d) Education: Strengthening of middle-level technical schools.

particularly those providing training in agriculture and mining - applied research in these two areas in particular.

C. Highlights of policy reforms in support of the national recovery programme (1986-1990)

The 1986-1990 five-year plan. focusing on (a) rehabilitation of the production system. (b) promotion of the social sectors supporting development.

and (c) improvement and rationalization of public administration, envisages the following principal reforms:

(a) Tax reform: incentives to private investment in the priority sectors and areas of the plan; establishment of a major free zone (at Inga), investment code, etc.;

(b) Liberalization: reduction of State intervention in direct production to the minimum. Public investment will focus on the rehabilitation of economic and social infrastructure and on rehabilitation of the production system. Certain non-viable public enterprises will be privatized; and

(c) Reforms relating to revenue collection and the reduction of unproductive expenditure to be realized through decentralization of tax collection as well as effective supervision of tax collectors.

D. Estimates of resource requirements for the national recovery programme 0986-1990 )

Millions of US dollars (i) Resources already mobilized

Domestically 1 095.0

Externally

Subtotal 1 095.0

(Lf ) Resources planned to be mobilized

Domestically 1 951. 9

Externally 1 415.0

Subtotal 3 366.9

(iii) Estimates of likely available resources 4 461. 9

(iv) Total estimated cost of programme 5 220.9

(v) Resource gap 759.0

E. Estimates of debt-servicing requirements 0986-1990) (in millions of US dollars)

Type of debt

Official creditors Private creditors Total

Interest 914.9 128.5 1 043.4

Principal 1 378.3 546.7 1 925.0

Total 2 293.2 675.2 2 968.4

48. ZAMBIA