BUSINESS AND THE ECONOMY

Different views
The East African (October 30) compared the different views on the economy which had been expressed by President Kikwete and Bank of Tanzania (BoT) Governor Daudi Balali. Kikwete was quoted as saying on October 2 that the economy was upbeat, the budgetary performance undisturbed, and – despite the power crisis – the economy was stable and on course.

Balali however, painted a different picture on October 17. BoT figures showed that Tanzania’s economy was steadily being forced into a corner, and might soon be on the ropes. The article went on: ‘The oil import bill will triple this year, rising from the ‘normal’ figure of $400 million a year to more than $1.1 billion. The Tanzania shilling fell in value by 13% since January 2006. Export earnings had fallen from 15% of GDP to 4% this year. Each electricity unit that is not sold (as it was never generated in the first place because of a diminished capacity) represents a two-dollar loss to the country. And the projected economic growth of 7% this year has had to be revised down to 5.9%.

However, Finance Minister Zakia Meghji supported the President in a statement on October 19 saying that things were going as budgeted, courtesy of a disciplined administration.

Revised contracts with mining firms

The promise by President Kikwete to review contracts signed with mining firms seems to be coming true with the announcement that the contract with Barrick Gold has been revised. The Canadian firm running the gold mine in Bulyanhulu has has agreed to pay $7 million every year until when the firm starts paying corporate tax. In addition every district council within which the firm operates will be paid $200,000 annually. The 15% additional capital allowance on unredeemed capital expenditure has been removed from the agreement. The firm will have to buy local goods and services as and when possible. The process started when Kikwete asked the Ministry of Energy and Minerals to review the contracts in May. The Government Negotiation Team (GNT) was formed in July and negotiated with the Barrick, Geita and Resolute mining companies through the Chamber of Minerals and Energy. After the agreement reached with Barrick the other companies were expected to follow suit.

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