Macroeconomic Policy Development in Tanzania

Abstract

Since independence, Tanzania has experienced a series of economic shocks, which have pushed the country into an economic crisis. From mid-1980 onwards, major macroeconomic variables have been fluctuating, forcing the government to intervene through fiscal and monetary policies, with mixed results. The advent of the COVID-19 pandemic in March 2020 further disrupted any macroeconomic performance achieved earlier. In response, the BoT adopted macroeconomic policies aimed at shielding the economy from further deterioration by injecting greater funding into the public sector, for example through the healthcare sector. This was aimed at containing the spread of the pandemic.

To a large extent, these macroeconomic measures have protected the country against further deterioration in terms of greater loss of life, economic losses, etc. For example, the country’s ‘business-as-usual’ approach has steered clear of an economic lockdown in favour of urging the population to take precautionary measures. This, coupled with expansionary macroeconomic policy measures, appears to be working, as the country averted a recession in 2020. The BoT should continue implementing accommodative monetary and fiscal policy measures and fasttracking liquidity-easing measures to shield the economy.