BoT warns of pressures as IMF reports SSA growth

THE Bank of Tanzania (BoT) has warned of mounting economic pressures facing the region, urging stronger national responses to challenges such as the abrupt withdrawal of foreign aid and rising global tariffs.

The call came as the International Monetary Fund (IMF) released its latest Regional Economic Outlook yesterday, which showed that economic activity in sub-Saharan Africa (SSA) exceeded expectations in 2024.

The report indicates that the region’s GDP grew by 4.0 per cent in last year, up from 3.6 per cent registered in 2023. However, the IMF has slightly revised its forecasts for the coming years, projecting growth to moderate to 3.8 per cent this year before rebounding to 4.2 per cent next year.

BoT’s Deputy Governor Sauda Msemo said countries must act swiftly to adjust to the changing financial landscape.

“Various countries have different levels of reliance on foreign aid. Without it, many critical programmes and projects could be heavily impacted, threatening the hard-won recovery,” she said:

“We have taken prompt measures, including reallocating the national budget to maintain progress.”

The IMF noted that the slowdown in momentum has been driven largely by turbulent global conditions, citing subdued external demand, declining commodity prices, and tighter global financial conditions-particularly affecting commodity exporters and nations with stronger trade links to the US.

The outlook also highlighted that official development assistance to the region is expected to decline, adding further strain on vulnerable economies already grappling with funding shortfalls and rising borrowing costs.

“After four years of crisis, authorities in sub-Saharan African countries already faced the complex challenge of maintaining economic stability while pursuing long-term development goals amid high social expectations,” the IMF said.

ALSO READ: Bank of Tanzania blocks 69 unlicensed loan apps

While regional inflation is beginning to ease, several countries continue to experience high inflation rates, necessitating tight monetary policies and sustained fiscal support.

Policymakers are urged to balance the need for growth with macroeconomic stability through careful policy adjustments.

In response to the shifting global landscape, including trade tensions and recent tariff hikes by the USSub-Saharan African (SSA) countries are being called upon to build greater domestic resilience.

“Policymakers will need to increasingly draw on their own sources of strength,” the IMF advised, stressing the importance of mobilising domestic revenue, improving spending efficiency, and strengthening fiscal frameworks.

Ms Msemo said that in Tanzania, the upcoming financial year beginning in July will include increased budgetary provisions aimed at cushioning the economy from further external shocks.

Looking ahead, the IMF stressed that the private sector must play a greater role in driving sustainable development. Structural reforms aimed at enhancing governance, improving the business climate, and deepening regional integration will be crucial.

Investments in human capital and infrastructure are also seen as essential to fostering inclusive growth.

Nearly one-third of the population in sub-Saharan Africa still lives below the poverty line, underscoring the need for broad-based economic strategies that prioritise job creation and protect the most vulnerable.

Though 2024 brought positive growth, the region’s medium-term prospects remain clouded by uncertainty-both domestic and global.