Financial Policies

Write a one page argument for what financial policies you think the government of your assigned country should pursue. (Tanzania)

This paragraph is not just descriptive. Instead, you should make an argument: take a stand on a specific policy and defend your choice. You will be graded not on which policy you choose, but rather how well you support your argument.

First, explain a policy approach you think the country should take with regards to both banking and foreign capital OR development aid.

Second, briefly explain what effects you’d expect the policy to have in theory.

Third, explain why you think those effects are good for the country.

Requirements:

• 12 point font (Times New Roman, Computer Modern, or something similar)
• Double spaced
• 1 inch margins
• Cite at least 1 source
• Refer back to the last two week’s assignment at least once OR cite an additional source on development aid

To clarify: cite 2 sources OR cite 1 source and refer back to the last two pages at least once.

(I’ve uploaded the last two pages you did before incase you may refer to)

Week 5: Balance of Payments of Tanzania

The balance of payments shows the monetary transactions that are made by the residents of a country and the rest of the world during a given period. A country is said to have a surplus or positive balance of payments if the amount of the sources received by the country, from exports and bonds sold exceed the funds that are used in imports. In this paper, the balance of payments of Tanzania will be evaluated using the data collected from the IMF database.

Currently, Tanzania has a negative current account. The current account shows the net exports of a country. IN this case, Tanzania had exports of goods worth $5,377.60 million in 2019. Its goods imports in the same year were $8,600.00 million. That indicates that its current account balance was $-3,222.40 million. Additionally, the exports of services in the same year were $4,280.6 million and the imports of the goods were $1,761.70 million (IMF, n.d.). The total balance of payments is $-703.50. In the last 30 years, the trend of the current balance in goods and services has not been constant. In the years before 2005, the balance of payment was decreasing. It then increased steadily until 2014 when it started decreasing again.

The capital account balance in this case excludes reserves and related items. The credit capital account was $420.5 million in 2019 whereas the capital account debit was $0. Thus, in this case, the country has a negative balance (IMF, n.d.). This balance has been unsteadied and it is challenging to identify any particular trend. Overall, the balance on current and capital account as of 2019 was $-880.90 million. That shows that Tanzania has a negative balance of payments currently.

 

 

References

IMF. (n.d.). Balance of Payments. IMF database. https://data.imf.org/regular.aspx?key=62805740

Week 6: Economic Crises of Tanzania

The economy of Tanzania is considered to be a lower-middle-income economy that is significantly dependent on agriculture.   The economy of Tanzania has been greatly transitioning from a command economy to a market economy since its independence.  However, despite the economic rate of Tanzania growing significantly, the country has previously and continues to experience some economic crises in its operations.  First, Tanzania has encountered several challenges since independence such as the Tanzanian shilling becoming unstable, abolition of cooperatives, rural-urban migration effects of the Ujamaa policy, and the proliferation of African enterprises (Msami, & Wangwe, 2016).  During the early years of independence, the country experienced a high proliferation of African enterprises which led to the widening gap between the rich and the poor. The crisis of poverty continues to a major challenge in Tanzania with the majority of the population living on less than $2 per day and many children die every day since they are very poor to survive.

Economic inequality among the rich and the poor resulted in various consequences such as decreasing levels of education among the poor, increase in political instability, low quality of health care services, and rise in crime. Due to a wide gap between the rich and the poor, it led to many economically unequal societies have higher crime rates since it increases the incentive of people committing crimes. The incident of the Tanzanian shilling becoming unstable because of price fluctuations of some commodities adversely affected the economy of Tanzania (Kessy, 2020). Currency fluctuations led to economic crises in Tanzania by causing inflation, affecting capital flows, merchandise trade, and interest rates.  The unstable shilling of Tanzania weakened the currency of Tanzania which contributed to the country’s trade deficit.  The weaker currency made imports to be more expensive while making their exports to be cheaper for overseas customers to purchase.  Consequently, the removal of cooperatives in the country led to many farmers cutting down their production.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference

Kessy, A. T. (2020). Neoliberalism, economic crisis, and domestic coffee marketing in Tanzania. In The Palgrave Handbook of African Political Economy (pp. 399-412). Palgrave Macmillan, Cham.

Msami, J., & Wangwe, S. (2016). Industrial development in Tanzania. Manufacturing Transformation, 155.