Agriculture (26.6%), Industry (22.6%)
Significant measures have been taken to liberalize the Tanzanian economy along market lines and encourage both foreign and domestic private investment. Beginning in 1986, the Government of Tanzania embarked on an adjustment program to dismantle socialist economic controls and encourage more active participation of the private sector in the economy. The program included a comprehensive package of policies which reduced the budget deficit and improved monetary control, substantially depreciated the overvalued exchange rate, liberalized the trade regime, removed most price controls, eased restrictions on the marketing of food crops, freed interest rates, and initiated a restructuring of the financial sector.
Current GDP per capita of Tanzania grew more than 40% between 1998 and 2007. In May 2009, the International Monetary Fund approved an Exogenous Shock Facility (ESF) for Tanzania to help the country cope with the global economic crisis. Tanzania is also engaged in a Policy Support Instrument (PSI) with the International Monetary Fund, which commenced in February 2007 after Tanzania completed its second 3-year Poverty Reduction and Growth Facility (PRGF), the first having been completed in August 2003. The PRGF was the successor program to the Enhanced Structural Adjustment Facility (ESAF), which Tanzania also participated in from 1996-1999. The IMF's PSI program provides policy support and signaling to participating low-income countries and is intended for countries that have usually achieved a reasonable growth performance, low underlying inflation, an adequate level of official international reserves, and have begun to establish external and net domestic debt sustainability.
Tanzania also embarked on a major restructuring of state-owned enterprises. The program has so far divested 335 out of some 425 parastatal entities. Overall, real economic growth has averaged about 4% a year, much better than the previous 20 years, but not enough to improve the lives of average Tanzanians. Also, the economy remains overwhelmingly donor-dependent. Moreover, Tanzania has an external debt of $7.9 billion. The servicing of this debt absorbs about 40% of total government expenditures. Tanzania has qualified for debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) initiative. Debts worth over $6 billion were canceled following implementation of the Paris Club 7 Agreement.
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