Country Study 17

Tanzania has not yet successfully had an IMF standby arrangement that ran its course, although several programmes have been implemented at various points in time. These programmes combined demand restraint and structural adjustment with the help of external resources. While demand restraint measures were actively pursued, structural adjustment measures were inadequate. This was caused partly by shortfalls in external resources to support the programmes and partly by uncertainty surrounding the effects of stabilization measures on growth. Although the prolonged debate with the IMF on stabilization finally culminating in 1986 agreement on a $82 million standby loan has delayed required action, it has also helped generate greater maturity in the internal policy dialogue and created the feeling that a programme of recovery should be essentially Tanzanian - with external resources seen as supportive rather than as a substitute for Tanzania's own effort. The recent reforms, of 1984-86, are having some positive impact and the economy is estimated to have grown by 3.3 per cent in 1986: a similar rate is estimated for 1987. But it is far too early to be sure that this tentative recovery will be sustained. In the view of the author, Dr. Benno Ndulu, an internal consensus on the major causes of the crisis and a generally agreed-upon programme for recovery are the most important conditions for sustained stabilization and adjustment efforts. Action based on conviction can never effectively be substituted by imposed action. Tanzania has learnt much from its previous efforts, unsuccessful though they were. The current gradual recovery and the reforms that have been put in place give some grounds for believing that the lessons have not been forgotten. Tanzania's prospects look better than they have been for several years.