Tanzania's economic outlook promises to be sound, said a new report released on Tuesday by UK-based Exotix Partners in collaboration with the Kenya-based Equity Investment Bank.
The report released in the commercial capital Dar es Salaam said there is light at the end of Tanzania's economic tunnel.
The report said most of the bad performance of the banking sector and, by extension, of the private sector could be directly attributed to President John Magufuli's anti-corruption and anti-tax evasion drive, which have proven disruptive in the short term but could prove productive in the long term.
"In our view, this reformist agenda has proved painful but should these policy actions be sustained they could act as a long-term positive catalyst for the efficiency of Tanzania's public sector institutions," the report said.
Some of the actions and policy directives that President Magufuli took and which could have proven disruptive include summary dismissal of a dozen of heads of key public institutions and a crackdown on phantom workers as well as other cost-cutting measures.
The report said the anti-tax evasion, however, has had positive results, adding: "Developments around tax evasion have been welcomed for their ability to increase tax collections and according to the International Monetary Fund (IMF) this should culminate in an increase in government revenues as a percentage of Gross Domestic Product from 15.1 per cent in 2015 to 16.9 per cent in 2021."
The report said economic forecast by the IMF and other institutions also painted a positive picture.
The IMF is forecasting real GDP growth will average 6.7 per cent between 2016 and 2021 after growing at an average of 7 per cent in the last two decades.
The report said the IMF expected Tanzania's GDP to increase from an estimated 46.7 billion U.S. dollars in 2016 to 70.7 billion U.S. dollars by 2021.
"Encouragingly, inflation is expected to remain stable at 5.0 per cent throughout the forecast period," added the report.