Tanzania cut its 2017 growth forecast to 7.1 percent from 7.4 percent, amid slowing private-sector credit growth and public spending cuts.
"Inflation will continue to be tamed at single-digit levels and is expected to fall to 5.0 percent in 2018," Finance and Planning Minister, Philip Mpango, told parliament on Tuesday.
Tanzania's inflation was unchanged at 6.4 percent year-on-year in April from a month earlier.
The International Monetary Fund warned Tanzania in January that sluggish private sector credit growth and drastic public spending cuts threatened economic growth prospects.
Lending to the private sector grew by 2.5 percent in 2016 after expanding 26.8 percent a year earlier, according to Tanzanian central bank data.
The slowdown comes as President John Magufuli pursues an aggressive anti-graft campaign. He has fired the mining minister, head of the tax authority, the head of the ports authority and thousands of civil servants.
East Africa's second-biggest economy said it plans to lower the budget deficit to 3.8 percent of GDP in fiscal year 2017/18 (July-June) from around 4.5 percent previously.
Mpango said the fastest-growing sectors in 2016 included communication at 13 percent, construction at 13 percent, transport and storage at 11.8 percent and mining and quarrying at 11.5 percent.
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