Tanzania began its independence as asocialist country, but in the 1980s economic difficultiespushed it to adopt macroeconomic reforms, among themremoving direct controls on prices and exchange and interestrates and opening up industry to private investment. Reformsintensified in the second half of the 1990s with steep cutsin public spending, which helped the Government to move fromfiscal deficits to surpluses. Inflation was brought undercontrol. Exchange rate stability was restored, and theGovernment carried out structural reforms to boost exports,liberalize domestic markets, and reduce public sectorinvolvement in the economy. This Systematic CountryDiagnostic (SCD) provides an informed and integrativeperspective on what Tanzania can do to move its nationalgoals forward. The primary aim of the SCD is to analyze thecountry’s current opportunities and challenges and identifypriority areas for policy action. The findings will be thefoundation for the Country Partnership Framework (CPF),which will guide the engagement of the World Bank Group(WBG) with Tanzania for the next five years. The SCD buildson a wide range of analyses conducted by the WBG, theGovernment, and other institutions. The World Bank’s CountryEconomic Memorandum (CEM) 2014 and poverty assessment 2015have contributed to the diagnostic, and the Policy Notes forthe New Administration, presented in December 2015, helpedset the sector-specific policy agenda and informed theanalysis of binding constraints and potential solutions.Consultations for the SCD brought in a broad range of stakeholders.