Creating Sustainable Fiscal Space for Infrastructure: The Case of Tanzania

A Rule-Based Medium-Term Fiscal Policy Framework for Tanzania

“…Revenue gains are expected to come from further capacity enhancement of the LTD and then adopting best practices for dealing with medium-sized taxpayers. Reforms to the fiscal regime for the mining sector currently under study also hold the prospect of revenue gains in the medium term (Ter-Minassian, Hughes, and Hajdenberg, 2008). With the sustained improvement in domestic revenue collection, prudent expenditure policy, which generally held annual public spending at about 23 percent of GDP for 2005-08, has reduced the fiscal deficit.…”

“…To address the problem, the Tanzanian government plans to accelerate public investment. Various options for mobilizing additional resources to support such a stepping up of investment spending have been explored by the authorities (Ter-Minassian, Hughes, and Hajdenberg, 2008), such as collecting more domestic revenue, reprioritizing spending, public-private partnerships (PPPs), external grants and concessional financing, and borrowing from international capital markets. Going forward with economic development strategies, rule-based fiscal policy could ensure that the annual fiscal position is consistent with economic stability, fiscal sustainability, and long-term economic growth.…”