TANZANIA SEES STRONG 2012 GDP GROWTH, PLANS EUROBOND.

Mr.Bennon Ndulu.

- Less electricity outages expected this year

-Says revives Eurobond plans

-Capital account restrictions to be relaxed

Tanzania expects its economy to grow by as much as 7 percent this year, faster than 6.4 percent in 2011, its central bank governor said on Thursday, as itfaces fewer problems with power shortages.

Benno Ndulu said the east African country had revived dormant plans for a Eurobond, to help with its infrastructure spending, although the amount and timing of the issuance had yet to be decided.

“The number of problems that we had with power, et cetera are not of the same magnitude,” Ndulu said on the sidelines of the World Economic Forum on Africa on this week in Ethiopia.

“For this year, between 6.6 to 7 percent (growth)… we have worked on the numbers.”

Earlier this week, Tanzania’s statistics body said frequent power blackouts caused economic growth to slow to 6.5 percent in the fourth quarter of 2011 from 6.7 percent a year earlier.

Power output in the country of 42 million people fell 22 percent in the third quarter of last year, due partly to low water levels in its hydroelectric reservoirs.  

Economic analysts say increasing investor interest in Tanzania’s telecommunications, energy and financial services sectors should help drive economic growth if the world economy recovers.

It is attracting a lot of investor attention to its natural gas deposits, whose reserves the government says stand at an estimate of more than 10 trillion cubic feet following recent discoveries.

Tanzania is Africa’s fourth-largest gold producer and its mining sector has attracted major investment over the past decade.

The International Monetary Fund said in March it expects the economy to expand by 6.5 to 7 percent in 2012-13.

Ndulu said the country had revived its plan to issue a Eurobond although he gave few details.

“Even the amount has to be determined… We have to first complete the country rating. After we have done the country rating, we have to do the usual road show and marketing,” he said.

Earlier this year, Tanzania said it planned to start opening up its capital account this year, enabling it to attract more investment initially from other members of the East African Community and then from the rest of the world by 2015.

  Ndulu said the country was gradually working on relaxing its capital controls in order to gain its sovereign debt rating.

“We are working on that. We have made a commitment under the East African market protocol and we’re going to keep to those commitments,” Ndulu said.

“We’re going to gradually remove most of those, but we’re aware that every country now works with speed bumps just because currencies have become so volatile.”

Source: (Reuters)