VI Tanzania
Author:
Mr. Mumtaz Hussain
Search for other papers by Mr. Mumtaz Hussain in
Current site
Google Scholar
Close

Abstract

Tanzania’s good record of sound macroeconomic policies and structural reforms has earned it the support of the donor community and debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. While structural adjustment started in the early 1990s, the government has increased its reform efforts since the late 1990s. Strong support from the donor community and from programs supported by the International Monetary Fund has helped the authorities implement prudent macroeconomic policies and economic reform. Aid inflows have been high throughout the period and have continued to increase in recent years. In 2004, budgetary aid inflows financed about 40 percent of public spending and stood at about 10 percent of GDP.

Cited By

  • Collapse
  • Expand
Lessons from Recent Experience
  • Acemoglu, Daron, Simon Johnson, James Robinson and Yungyung Thaicharoen, 2003, “Institutional Causes, Macroeconomic Symptoms: Volatility, Crises and Growth,” Journal of Monetary Economics, Vol. 50 (January), pp. 12531.

    • Search Google Scholar
    • Export Citation
  • Adam, Christopher, 2001, “Uganda: Exchange Rate Management, Monetary Policy and Aid” (unpublished; Bank of Uganda/UK Department for International Development).

    • Search Google Scholar
    • Export Citation
  • Adam, Christopher, and David L. Bevan, 2003, “Aid, Public Expenditure and Dutch Disease,” Center for the Study of African Economies Working Paper No. 2003–02 (February).

    • Search Google Scholar
    • Export Citation
  • Adam, Christopher, Stephen O’Connell, Edward Buffie, and Catherine Pattillo, 2006, “Monetary Policy Responses to Aid Surges in Africa,” paper presented at the UNU-Wider Conference on Aid: Principles, Policies and Performance, Helsinki, June 16–17.

    • Search Google Scholar
    • Export Citation
  • Adenauer, Isabelle, and Laurence Vagassky, 1998, “Aid and the Real Exchange Rate: Dutch Disease Effects in African Countries,” Intereconomics: Review of International Trade and Development, Vol. 33 (July/August), pp. 17785.

    • Search Google Scholar
    • Export Citation
  • Adler, John H., 1965, “Absorptive Capacity: The Concept and its Determinants,” Brookings Institute Staff Paper (Washington: Brookings Institution).

    • Search Google Scholar
    • Export Citation
  • Agenor, Pierre-Richard, Nihal Bayraktar, and Karim El Aynaoui, 2005, “Roads Out of Poverty? Assessing the Links Between Aid, Public Investment, Growth and Poverty Reduction,” World Bank Policy Research Working Paper No. 3490 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Arellano, Cristina, Aleš Bulíř, Timothy Lane, and Leslie Lipschitz, 2005, “The Dynamic Implications of Foreign Aid and Its Variability,” IMF Working Paper No. 05/119 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Berg, Andrew, and Anne Krueger, 2003, “Trade, Growth and Poverty: A Selective Study,” IMF Working Paper No. 03/30 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Berg, Andrew, Philippe Karam, and Douglas Laxton, 2006, “Practical Model-Based Monetary Policy Analysis: A How-To Guide,” IMF Working Paper No. 06/81 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Berg, Elliot, 1961, “Backward Sloping Labor Supply Functions in Dual Economies: The Africa Case,” The Quarterly Journal of Economics, Vol. 3, pp. 46892.

    • Search Google Scholar
    • Export Citation
  • Berg, Elliot, 1983, “Absorptive Capacity in the Sahel Countries,” Report to the Club Du Sahel (Paris: Organization for Economic Cooperation and Development).

    • Search Google Scholar
    • Export Citation
  • Bevan, David L., 2005, “An Analytic Overview of Aid Absorption: Recognizing and Avoiding Macroeconomic Hazards,” paper presented at the Seminar on Foreign Aid and Macroeconomic Management, Maputo, Mozambique, March 14–15.

    • Search Google Scholar
    • Export Citation
  • Blanchard, Olivier, and Nobuhiro Kiyotaki, 1987, “Monopolistic Competition and the Effects of Aggregate Demand,” American Economic Review, Vol. 77, pp. 64766.

    • Search Google Scholar
    • Export Citation
  • Bourguignon, François, Hans Lofgren, Maurizio Bussolo, Hans Timmer, and Dominique van der Mensbrugghe, 2005, “Building Absorptive Capacity to Meet the MDGs” (unpublished; Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Buffie, Edward, Christopher S. Adam, Stephen O’Connell, and Catherine Pattillo, 2004, “Exchange Rate Policy and the Management of Official and Private Capital Flows in Africa,” Staff Papers, International Monetary Fund, Vol. 51, Special Issue.

    • Search Google Scholar
    • Export Citation
  • Bulíř, Aleš, and Javier Hamann, forthcoming, “Volatility of Development Aid: From the Frying Pan into the Fire?IMF Working Paper (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo, 1983, “Staggered Prices in a Utility Maximizing Framework,” Journal of Monetary Economics, Vol. 12, pp. 38398.

  • Carroll, Christopher, 2001, “Death to the Log-Linearized Consumption Euler Equation! And Very Poor Health to the Second-Order Approximation,” Advances in Macroeconomics, Vol. 1, No. 1.

    • Search Google Scholar
    • Export Citation
  • Celasun, Oya, and Jan Walliser, 2005, “Predictability of Budget Aid: Experiences in Eight African Countries,” paper prepared for the World Bank Practitioners’ Forum on Budget Support, May, Cape Town, South Africa.

    • Search Google Scholar
    • Export Citation
  • Chowdhury A., and T. Mckinley, 2006, “Gearing Macroeconomic Policies to Manage Large Inflows of ODA: Implications for HIV/AIDS Programmes,” International Poverty Center Working Paper No. 17.

    • Search Google Scholar
    • Export Citation
  • Clemens, Michael, Steven Radelet, and Rikhil Bhavnani, 2004, “Counting Chickens When they Hatch: The Short-Term Effect of Aid on Growth,” Center for Global Development Working Paper 44 (Washington: Center for Global Development).

    • Search Google Scholar
    • Export Citation
  • Clement, Jean A.P., 2005, Postconflict Economics in Sub-Saharan Africa, Lessons from the Democratic Republic of the Congo (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Deninger, K., and J. Okidi, 2001, “Rural Households: Incomes, Productivity and Nonfarm Enterprises,” in Uganda’s Recovery: The Role of Farms, Firms and Government, ed. by R. Reinikka and P. Collier (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Easterly, William, Ross Levin, and David Roodman, 2003, “New Data, New Doubts: A Comment on Burnside’s and Dollar’s ‘Aid, Policies and Growth’,” NBER Working Paper No. 9846 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Elbadawi, Ibrahim A., 1999, “External Aid: Help or Hindrance to Export Orientation in Africa?Journal of African Economies, Vol. 8, No. 4, pp. 578616.

    • Search Google Scholar
    • Export Citation
  • Elbadawi, Ibrahim A., 2002, “Real Exchange Rate Policy and Non-Traditional Exports in Developing Countriesin Non-Traditional Export Promotion in Africa: Experience and Issues, ed. by Gerald Helleiner (New York: Palgrave).

    • Search Google Scholar
    • Export Citation
  • Fanizza, Domenico, 2001, “Foreign Aid, Macroeconomic Stabilization, and Growth in Malawi,” IMF Seminar Series No. 07 (January), pp. 121 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Foster, Mick, and Tony Killick, 2006, “What Would Doubling Aid do for Macroeconomic Management in Africa?ODI Working Paper 264 (London: Overseas Development Institute).

    • Search Google Scholar
    • Export Citation
  • Gapen, Michael T., and Thomas F. Cosimano, 2005, “Solving Ramsey Problems with Nonlinear Projection Methods,” Studies in Nonlinear Dynamics and Econometrics, Vol. 9, No. 2.

    • Search Google Scholar
    • Export Citation
  • Guillaumont, Patrick, 1971, L’absorption du Capital (Paris: Cujas).

  • Guillaumont, Patrick, and Lisa Chauvet, 2001, “Aid and Performance: A Reassessment,” Journal of Development Studies, Vol. 37, No. 6 (August), pp. 6692.

    • Search Google Scholar
    • Export Citation
  • Gupta, Sanjeev, Benedict Clements, Alexander Pivovarsky, Erwin R. Tiongson, 2003, “Foreign Aid and Revenue Response: Does the Composition of Aid Matter?IMF Working Paper No. 03/176 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Gupta, Sanjeev, Robert Powell, and Yongzheng Yang, 2005, “The Macroeconomic Challenges of Scaling Up Aid to Africa,” IMF Working Paper No. 05/179 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Hausmann, Ricardo, Lant Pritchett, and Dani Rodrik, 2004, “Growth Accelerations,” NBER Working Paper No.10566 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Heller, Peter, 2005, “Pity the Finance Minister: Issues in Managing a Substantial Scaling Up of Aid Flows,” IMF Working Paper No. 05/180 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Heller, Peter, and Sanjeev Gupta, 2002, “Challenges in Expanding Development Assistance,” IMF Policy Discussion Paper 02/5 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2003a, “Fund Assistance for Countries Facing Exogenous Shocks” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2003b, “Tanzania—Financial System Stability Assessment” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2004, “The Federal Democratic Republic of Ethiopia—Ex Post Assessment of Long-Term Fund Engagement” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2005a, “The Macroeconomics of Managing High Aid Inflows,” IMF Policy Paper (August). Available via the Internet: http://www.imf.org/external/np/pp/eng/2005/080805a.pdf.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2005b, “Update on the Assessments and Implementation of Action Plans to Strengthen Capacity of HIPCs to Track Poverty-Reducing Public Spending” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2006, “United Republic of Tanzania—Ex Post Assessment of Longer-Term Program Engagement” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund Independent Evaluation Office, 2004, “Evaluation of the IMF’s Role in Poverty Reduction Strategy Papers (PRSPs) and the Poverty Reduction and Growth Facility (PRGF)” (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Isard, Peter, Leslie Lipschitz, Alexandros Mourmouras, and Boriana Yontcheva, eds., 2006, The Macroeconomic Management of Foreign Aid: Opportunities and Pitfalls (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Kappel, R., J. Lay, and S. Steiner, 2005, “Uganda: No More Pro-Poor Growth?Development Policy Review, Vol. 23, No. 1.

  • Keynes, John Maynard, 1929, “The German Transfer Problem,” Economic Journal, Vol. 39 (March), pp. 17.

  • Kim, Jinill, and Sunghyun Henry Kim, 2003, “Spurious Welfare Reversals in International Business Cycle Models,” Journal of International Economics, Vol. 60, Issue 2 (August), pp. 471500.

    • Search Google Scholar
    • Export Citation
  • Klein, Michael, and Tim Harford, 2005, The Market for Aid (Washington: World Bank).

  • Leite, Carlos, and Charalambos Tsangarides, forthcoming, “Infrastructure for Developing Countries: The Growth Pill?IMF Working Paper (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • McGillivray, Mark, and Oliver Morrissey, 2001, “Fiscal Effects of Aid,” WIDER Discussion Paper 2001/61 (August), (Helsinki: World Institute for Development Economics Research, United Nations University).

    • Search Google Scholar
    • Export Citation
  • Milesi-Ferretti, Gian Maria, and Philip R. Lane, 2004, “The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates,” Review of Economics and Statistics, Vol. 86 (November), No. 4, pp. 84157.

    • Search Google Scholar
    • Export Citation
  • Miranda, Mario J. and Paul L. Fackler, 2002, Applied Computational Economics and Finance (Cambridge, Massachusetts: MIT Press).

  • Mohanty, M.S., and Philip Turner, 2006, “The Global Economy and Africa: The Challenges of Increased Financial Inflows,” paper presented at conference on Central Banks and the Challenge of Development, Bank for International Settlements, Basel, March 14–15. Available via the Internet: http://www.bis.org/events/cbcd06.htm.

    • Search Google Scholar
    • Export Citation
  • Nkusu, Mwanza, 2004a, “Aid and Dutch Disease in Low-Income Countries: Informed Diagnosis for Prudent Prognoses,” IMF Working Paper No. 04/49 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Nkusu, Mwanza, 2004b, “Financing Uganda’s Poverty Reduction Strategy: Is Aid Causing More Pain Than Gain?IMF Working Paper No. 04/170 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Nyoni, Timothy S., 1998, “Foreign Aid and Economic Performance in Tanzania,” World Development, Vol. 26, No. 7, pp. 1235240.

  • Obstfeld, Maurice, and Kenneth Rogoff, 1995, “Exchange Rate Dynamics Redux,” Journal of Political Economy, Vol. 103 (June), pp. 62460.

    • Search Google Scholar
    • Export Citation
  • O’Connell, Stephen A., Christopher Adam, Edward F. Buffie, and Catherine A. Pattillo, 2006, “Managing External Volatility: Central Bank Options in Low-Income Countries,” in Monetary Policy in Emerging Markets and Other Developing Countries, ed. by Nicoletta Batini (Hauppauge, New York: Nova Science Publishers).

    • Search Google Scholar
    • Export Citation
  • Ogun, Oluremi, 1995, “Real Exchange Rate Movements and Export Growth: Nigeria, 1960-1990” (unpublished; Nairobi: African Economic Research Consortium).

    • Search Google Scholar
    • Export Citation
  • Ouattara, Bazoumana, and Eric Strobl, 2003, “Do Aid Inflows Cause Dutch Disease? A Case Study of the CFA Franc Countries Using Dynamic Panel Analysis,” Manchester University School of Economics Discussion Paper Series No. 0330 (Manchester, UK: Manchester University).

    • Search Google Scholar
    • Export Citation
  • Prati, Alessandro, and Thierry Tressel, 2005, “What Monetary Policy for Aid-Receiving Countries?Paper presented at the DESAA Development Forum on Integrating Economic and Social Policies to Achieve the United Nations Development Agenda, March 14–15.

    • Search Google Scholar
    • Export Citation
  • Rajan, Raghuram, and Arvind Subramanian, 2005a, “What Undermines Aid’s Impact on Growth?IMF Working Paper No. 05/126 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Rajan, Raghuram, and Arvind Subramanian, 2005b, “Aid and Growth: What Does the Cross-Country Evidence Really Show?IMF Working Paper No. 05/127 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Sackey, Harry A., 2001, “External Aid Inflows and the Real Exchange Rate in Ghana,” AERC Paper No. 110 (November) (Nairobi: African Economic Research Consortium).

    • Search Google Scholar
    • Export Citation
  • Sekkat, Khalid, and Aristomene Varoudakis, 2000, “Exchange Rate Management and Manufactured Exports in Sub-Saharan Africa,” Journal of Development Economics, Vol. 61, No. 1, pp. 23753.

    • Search Google Scholar
    • Export Citation
  • Selassie, Abebe A., Benedict Clements, Shamsuddin Tareq, Jan Kees Martijn, and Gabriel Di Bella, 2006, Designing Monetary and Fiscal Policy in Low-Income Countries, IMF Occasional Paper No. 250 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Torvik, Ragnar, 2001, “Learning by Doing and the Dutch Disease,” European Economic Review, Vol. 45, No. 2, pp. 285306.

  • United Nations, 2006, “Dealing with the Macroeconomic Impact of the Scaling up of Aid,” background paper for a conference of African ministers of finance entitled “Financing for Development: From Commitment to Action,” May 21–22, Abuja, Nigeria. Available via the Internet: http://www.financingmdgsconference.org/session_papers.

    • Search Google Scholar
    • Export Citation
  • United Nations Millennium Project, 2005, Investing in Development: A Practical Plan to Achieve the Millennium Development Goals (New York: United Nations Development Program).

    • Search Google Scholar
    • Export Citation
  • White, Howard, and Ganeshan Wignaraja, 1992, “Exchange Rates, Trade Liberalization and Aid: The Sri Lankan Experience,” World Development, Vol. 20, No. 10 (October), pp. 1471480.

    • Search Google Scholar
    • Export Citation
  • World Bank and International Monetary Fund, 2005, Global Monitoring Report—MDGs: From Consensus to Momentum (Washington: World Bank and International Monetary Fund).

    • Search Google Scholar
    • Export Citation