Poverty and Human Development Report 2009 - UNDP in Tanzania

pOVertY aND hUMaN DeVeLOpMeNt repOrt 2009
developing countries facing severe institutional and capacity constraints that data sources are
subject to errors. ongoing improvements in data collection and processing will be required. 6
analysis now follows on the performance of cluster i’s six supporting goals for increasing growth
and reducing poverty.
Goal 1 Ensuring Sound Economic Management
sound economic management promotes investor confidence and provides the foundation of a
successful growth and poverty reduction strategy. efficiently managed budgets, tied to explicitly
agreed priorities for growth are essential element of sound economic management. this goal
has the following indicators:
• annual rate of inflation
• central government revenue as a percentage of gdP
• fiscal deficit as a percentage of gdP (before and after grants)
• external debt to export ratio
• exports as a percentage of gdP
Inflation
the government’s strong focus on macro-economic stability resulted in a reduction in the rate of
inflation between 2001 and 2004. since then, however, the annual rate of inflation has increased
sharply reaching 10.3% in 2008 (figure 5). the initial sharp increase was driven largely by the
drought in the 2005/06 rainy season, which adversely affected food production and hydropower
generation, and by a hike in petroleum prices. in 2008, the economy was subjected to further
inflationary pressure as domestic oil and food prices continued to climb.
Figure 5: Rate of Inflation 2000 – 2008
Inflation (%)
14
12
10
8
6
4
2
0
5.2
4.5 4.4
4.2
2001 2002 2003 2004 2005 2006 2007 2008
source: economic survey 2008
Years
6 see deaton & Kozel (2005) for a more detailed discussion of the potential sources of error.
4.3
7.3
7.0
10.3