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Tanzania should fix electricity sector to maintain growth- IMF

DAR ES SALAAM, Oct 2 (Reuters) - Tanzania needs to limit power outages if it wants to maintain buoyant growth this year and next, the International Monetary Fund mission to Tanzania said on Tuesday, urging the government to come up with a viable plan for the sector.

Paolo Mauro, leader of the IMF mission to Tanzania, re-affirmed the fund's predictions that the Tanzanian economy will grow between 6.5 percent and 7 percent in 2012 and said growth is projected to "remain buoyant" in 2013.

But Tanzania, like neighbouring Uganda and Kenya, frequently suffers from blackouts and Mauro singled out electricity supply as a potential stumbling block to Tanzania's economic growth.

"(The IMF) urges the government to prepare rapidly an action plan to address challenges in the electricity sector," Mauro said in a statement.

"Near-term challenges relate to the need to preserve ample and reliable electricity supply while ensuring the financial viability of national power utility TANESCO, where sizable outstanding payment arrears have built up vis-a-vis suppliers following the emergency power plan introduced in late 2011."

A report from the government's chief auditor in April exposed mismanagement and misuse of government funds in TANESCO and other state-run agencies.

However, the IMF mission's report on Tanzanian economy was positive overall, with the fund praising the government's 2012/2013 budget, which it said "appropriately balances" the need for sustained fiscal consolidation, preserving social spending, and creating room for critical infrastructure investment.

(Reporting by Fumbuka Ng'wanakilala; Writing by Drazen Jorgic; Edting by James Macharia)

((nairobi.newsroom@reuters.com)(+254 202 224 717)(Reuters Messaging: drazen.jorgic@thomsonreuters.com))

Keywords: TANZANIA IMF/