December 19, 2014 / 9:29 AM / in 3 years

UPDATE 2-Tanzania's GDP expands by 32 pct after rebasing - officials

* Bigger GDP may mean government can borrow more

* Rebased economy accounts for big gas discoveries

* GDP growth for 2013 revised to 7.3 pct from 7 pct (Adds analysts comment)

By Fumbuka Ng‘wanakilala

DAR ES SALAAM, Dec 19 (Reuters) - Tanzania’s gross domestic product has expanded by 32 percent after the state rebased its calculation to incorporate new sectors in the economy, including big discoveries of natural gas, officials said on Friday.

The east African country’s GDP stood at 69.8 trillion Tanzanian shillings ($41.33 billion) in 2013 after the rebasing, up from a previous estimate of 53 trillion shillings, the National Bureau of Statistics (NBS) said.

“The rebasing of the GDP takes into account new transformations in the economy, such as the ongoing mobile phone revolution in the country,” Finance Minister Saada Mkuya told a news conference.

Farming remains Tanzania’s economic mainstay, while tourism, mining, communications and financial services are the other key sectors. Tanzania has also made big natural gas discoveries, with revenues expected to give a boost to the economy by 2020.

As with other rebasings in Africa, the move takes into account structural and other economic changes, such as fast-growing mobile phone communications and ongoing hydrocarbon exploration activity.

The base year for calculations was changed to 2007 from 2001 and the NBS said GDP growth for 2013 was subsequently revised up to 7.3 percent from 7 percent previously.

Humphrey Moshi, professor of economics at the University of Dar es Salaam, said the expansion would give investors more confidence in Tanzania.

“The rebasing of the GDP will allow for comparability of economic data between Tanzania and its east African neighbours such as Kenya and Uganda, which have also recently rebased their economies,” he told Reuters.

Kenya, East Africa’s biggest economy, revised up its GDP by 25 percent to $53.4 billion in 2013 after rebasing, from $42.6 billion previously.

However, Moshi said the economy still faced serious challenges, such as a budget deficit and inflationary pressures.

“Power availability remains erratic and the government needs to restore the trust of donors after they suspended aid to the country due to high-level corruption scandals.”

Tanzania’s attorney general resigned on Tuesday, becoming the first political casualty in an energy corruption scandal that has led Western donors to delay aid.

Lawmakers found that officials, including the attorney general and the energy minister, fraudulently authorised the transfer of at least $122 million of public funds to a private company. The officials have denied wrongdoing.

$1 = 1,689 Tanzanian shillings Editing by James Macharia and Crispian Balmer

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