President John Pombe Magufuli are having more worries on the horizon, as the International Monetary Fund (IMF) in November went through the Financial System Stability Assessment (FSSA) there. Clearly, the government have picked up a habit or loans, which isn’t that good. Surely, some of them are the Chinese loans that could hit the economy. Also, other loans that is hurting the economy combined with the ways of the bulldozer.
The President has had his ways… He has attacked businesses, the mining industry and the agricultural sector too. Therefore, the financial market is getting hit too. This is because of the years with Magufuli who has had his way. Now the consequences of it is coming to the surface.
IMF Press Release:
“Directors noted that despite favorable macroeconomic conditions, financial stability challenges are significant with deteriorating asset quality, falling credit growth and liquidity pressures. Directors noted that continued macroeconomic stability, an improved business environment, better execution of fiscal policy and resolution of government payment arrears would help address financial sector vulnerabilities and risks. Directors stressed the need to improve asset quality, address non-performing loans and increase capital buffers in the banking system. In this context, they cautioned against potential excessive use by banks of the regulatory relief provided by the Bank of Tanzania’s circular for loan classification and restructuring. They encouraged the authorities to issue further guidance aimed at preventing banks from overstating capital ratios and earnings” (International Monetary Fund – ‘IMF Executive Board Concludes the United Republic of Tanzania’s 2018 Financial System Stability Assessment’ 06.12.2018. link: https://www.imf.org/en/News/Articles/2018/12/06/pr18455-tanzania-imf-executive-board-concludes-2018-financial-system-stability-assessment#.XAl1-CvQt3w.twitter
This is worrying as this is destroying the economy. Who knows who is eating, but someone is earning on this non-performing loans and the crashing financial markets. With that is the losing value of assets, lack of liquidity and bad loans. All of this can amount to rising inflation and later issues of lack of assets and liquidity to actually salvage the non-performing loans. That is like an evil bad circle of financial mismanagement.
I know that President Magufuli don’t want to hear that, he don’t even want to see the stats or get anything out that isn’t sanction by his men. He wants everybody to move after his words and orders. That will not create anything good. The President has to see this and find out ways to figure this out.
The Economy is clearly failing, the Financial Market is fragile and who knows what is up next. But there has to be significant changes to change the current state of affairs. What this is showing is the picture that the President and CCM doesn’t want to show. As this is the weakness of the government and the Financial Market at this point. It is not a good look. Peace.