The Citizen (Dar es Salaam)
27 April 2011
Dar Es Salaam — Tanzania, like other East African Community (EAC) member states, may soon experience an economic crisis, experts warn, calling upon the government to initiate preventive measures before the situation gets out of control.
Those who spoke to The Citizen cited issues like high energy and food prices, expensive and erratic power supply, increasing inflationary pressures and decreasing government revenue collections as causes for serious concern.
Although the situation has not reached alarming levels, experts say urgent measures should be taken to prevent the worst from happening. Steps being proposed include cutting tax on petroleum products and coming up with lasting solutions to power problems.
“Reducing taxes on fuel could be an effective, though difficult, solution to skyrocketing prices…why is it that countries such as Zambia, which import fuel through Dar es Salaam port, have lower prices than Tanzania?” queried Prof Humphrey Moshi of the University of Dar es Salaam’s Economics Department.
Prof Delphin Rwegasira, who serves as Mwalimu Julius Nyerere Professorial Chair in Development at the same university, said it was too early to talk of an economic crisis. He noted, however, that it was time the country trod cautiously on fuel taxes.
Prof Samuel Wangwe, the executive director of the Research on Poverty Alleviation (Repoa), said if the situation in North Africa and Middle East persisted and seriously disrupted oil supplies, Tanzania’s economy would be seriously affected and an economic crisis would be imminent.
Petrol and diesel currently retail for around Sh2,000 a litre, an all-time high. The government says it is aware of the situation, noting, however, that there is no cause for alarm.
“We are aware of the situation but we do not have immediate plans to reduce fuel prices. The problem of fuel prices in Tanzania is much more than just taxes. The real culprit is high crude prices in the world market. Tax is just a small factor,” Finance and Economic Affairs minister Mustafa Mkulo told The Citizen.
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