Frequently Asked Questions on Tanzania

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The IMF Executive Board approved a 40-month, US$1,046.4 million Extended Credit Facility (ECF) arrangement for Tanzania to:
- help complete the COVID-19 health and economic response and growth recovery;
- maintain macroeconomic stability;
- assist in coping with spillovers from the war in Ukraine (including disrupted tourist flows and increased prices of oil, wheat, and fertilizers).
Over the medium term, the ECF arrangement will support reforms to revitalize the economy and promote sustainable and inclusive growth while safeguarding macroeconomic and fiscal stability.
The ECF provides financial assistance to countries facing protracted balance of payments difficulties, with the aim of restoring macroeconomic stability and reducing poverty through strong growth.

The ECF carries a zero-interest rate, with a grace period of 5½ years, and a final maturity of 10 years.
Semi-annual disbursements are subject to reviews scheduled, at most, six months apart; these reviews assess the government’s progress in implementing economic reforms.
The first tranche of about $151.7 million was disbursed when the program was approved by the IMF Executive Board on July 18, 2022.
The ECF-supported program has built-in flexibility, allowing targets (notably reserves and fiscal objectives) to be modified at semi-annual reviews.

Emergency assistance under the IMF’s Rapid Credit Facility (RCF) in 2021 (about 0.8 percent of GDP) helped address the immediate fallout of the COVID-19 pandemic by supporting:
- the pandemic response and building/equipping ICUs and emergency facilities;
- improvements in sanitation and measures to reduce congestion in schools.
Further Fund assistance is needed to address development and reform challenges and to unleash Tanzania’s economic potential amid new shocks from the war in Ukraine.

Increases in international energy and food prices are pushing up local prices in Tanzania, increasing inflation and posing hardships on households.
Tightening global financial conditions could increase borrowing costs in the economy.
Under the ECF program, Tanzania is implementing temporary and targeted measures to reduce vulnerability to shocks, including:
- subsidies on selected fuel imports;
- subsidizing domestic fertilizer production;
- strengthening social assistance programs including through transfers;
- implementing structural reforms to boost economic resilience and improve the business environment.

Tanzania’s risk of external debt distress remains moderate, mainly because the pandemic continued to affect export receipts (including tourism receipts), marginally weakening Tanzania’s ability to service its external debt.
The program emphasizes:
- accessing concessional external financing to the greatest extent possible;
- a credible, multi-year effort to mobilize domestic revenues;
- reducing deficits and fiscal risks;
- improving spending quality and efficiency to maintain fiscal and debt sustainability and catalyze donor support.

The ECF program pays particular attention to higher priority social spending to meet Tanzania’s substantial needs.
Tanzanian authorities have committed to raise spending on health and education through:
- hiring additional health workers and primary and secondary teachers;
- equipping schools and health care facilities.
The existing cash-transfer system will be expanded.
Improving health and social assistance aims to improve the quality and quantity of human capital, reduce poverty, and promote sustainable and equitable growth and development.
The program also emphasizes improving revenues and spending quality, including by reducing fiscal risks and improving public investment management, to facilitate progress in key physical infrastructure projects underpinning the authorities’ development plan.

Governance commitments under the program are progressing, including:
- tracking of COVID-19 related expenditures;
- publishing of the first two quarterly reports of spending under the RCF;
- ongoing disclosure of beneficial ownership information for COVID-19 procurement contracts;
- publishing of the audit of pandemic-related spending financed with debt relief under the IMF’s Catastrophe Containment and Relief Trust in July 2022.
Tanzanian authorities have undertaken steps to correct deficiencies in Tanzania’s AML/CFT framework identified by the Financial Action Task Force.
During the ECF program, authorities will:
- continue publication of quarterly reports of RCF spending;
- complete disclosure of pandemic-related spending contracts;
- publish an audit of all pandemic-related spending;
- improve the effectiveness of the AML/CFT framework, including amending relevant laws and strengthening implementation and enforcement of a comprehensive anti-corruption strategy.