Despite rather satisfactory overall GDP growth rates (6 per cent), development has been slowed down by vigorous population growth (2.8 per cent) and made uncertain by the absence of a true growth engine. Recent growth performances result more from the effects of favourable terms of trade and foreign financing flows on domestic demand than from autonomous supply-driven growth. The issue of growth sustainability also arises in connection with high investment rates over the last few years. It is not clear whether the economy can maintain such a high rate of accumulation without heavily relying on foreign financing. Dependence on this is excessive. A third challenge is to be found on the social side. Poverty is declining only slowly, and social spending is limited. That growth has not trickled down more systematically to all segments of the population is a problem because it weakens the transformative role of development. Offshore natural gas reserves could soon provide more resources for Tanzania’s public sector. Yet natural resource windfalls are difficult to manage and may be a source of economic and institutional instability.