Macroeconomic Policy Development in Tanzania

This policy briefing, produced as part of the COVID-19 Macroeconomic Policy Response in Africa (CoMPRA) project, analyzes Tanzania's macroeconomic policy development and its response to the COVID-19 pandemic. It details the fiscal and monetary measures implemented by the government and the Bank of Tanzania (BoT) to avoid recession, the economic impacts of the pandemic on GDP and trade, and provides recommendations for future financial stability, social protection, and climate resilience.

• Tanzania avoided a recession in 2020 by adopting a 'business-as-usual' approach that eschewed economic lockdowns in favor of precautionary measures and expansionary macroeconomic policies.
• The COVID-19 pandemic negatively impacted Tanzania's economy by reducing tourism and traditional export receipts, which decelerated GDP growth from approximately 7% in 2019 to projected rates of 5.5% and 5.4% for 2020 and 2021, respectively.
• To maintain liquidity for businesses and financial institutions, the Bank of Tanzania (BoT) implemented several monetary easing measures, including reducing the discount rate from 7% to 5%, lowering statutory minimum reserves from 7% to 6%, and reducing interest on Treasury bills (from 10% to 5%) and Treasury bonds (from 40% to 20%).
• The Tanzanian government utilized fiscal measures to support economic growth during the pandemic, such as reducing taxes in the 2020/21 budget (including VAT on crop insurance) and accelerating the payment of verified domestic payment arrears (TZS 916 billion through March 2020) and VAT refunds (TZS 174 billion through April 2020).
• To protect vulnerable populations, the briefing recommends the government fast-track the disbursement of $882 million for the Productive Social Safety Net Programme (PSSN), noting that a pilot e-payment programme in 16 districts saw over 65% of recipients be women.
• The authors recommend that the Bank of Tanzania complement monetary measures with macroprudential policies to manage credit and liquidity and reduce non-performing loans to ensure financial system stability.
• The document suggests building a climate-resilient economy by accelerating the implementation of the environmental, climate-change, and disaster-preparedness components of the Third National Five-Year Development Plan (2020/21 to 2025/26).

APA

MASHINDANO, O. J., & KAZI, V. (n.d.). Macroeconomic Policy Development in Tanzania. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2022/03/CoMPRA-14-mashindano-kazi5159.pdf

Chicago

MASHINDANO, OSWALD JOSEPH, and VIVIAN KAZI. Macroeconomic Policy Development in Tanzania. South African Institute of International Affairs, n.d. https://saiia.org.za/wp-content/uploads/2022/03/CoMPRA-14-mashindano-kazi5159.pdf.

Wikipedia

{{cite report |last1=MASHINDANO |first1=OSWALD JOSEPH |last2=KAZI |first2=VIVIAN |title=Macroeconomic Policy Development in Tanzania |publisher=South African Institute of International Affairs |url=https://saiia.org.za/wp-content/uploads/2022/03/CoMPRA-14-mashindano-kazi5159.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mashindanondmacroeconomic, author = {MASHINDANO, OSWALD JOSEPH and KAZI, VIVIAN}, title = {{Macroeconomic Policy Development in Tanzania}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2022/03/CoMPRA-14-mashindano-kazi5159.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }