IMF Executive Board Approves $14.3 Million Debt Relief to the United Republic of Tanzania Under the Catastrophe Containment and Relief Trust

IMF News, June 10, 2020

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Canonical URL: IMF Executive Board Approves $14.3 Million Debt Relief to the United Republic of Tanzania Under the Catastrophe Containment and Relief Trust

The Executive Board approved debt relief under the Catastrophe Containment and Relief Trust (CCRT) to provide US$14.3 million over the next 4 months.
Additional relief covering the period from October 14, 2020 to April 13, 2022 will be granted subject to the availability of resources in the CCRT, potentially bringing total relief on debt service to the equivalent of about US$25.7 million.
The grant covers Tanzania’s debt service falling due to the IMF from today to October 13, 2020 (equivalent of US$14.3 million).

IMF debt service relief aims to:
- Free up public resources for public sector health needs and other emergency spending.
- Mitigate the balance of payments shock resulting from the pandemic.
- Contribute to alleviating Tanzania’s balance of payment needs stemming from the COVID-19 pandemic.
The authorities are committed to using the additional resources for their intended purposes and in a transparent manner, including through ex-post audits of COVID-related spending.

The pandemic has weakened near-term macroeconomic prospects for Tanzania.
The country faces:
- A drastic reduction in tourism receipts.
- Budget pressures.
- A projected deceleration of GDP growth from over 6 percent to 4 percent in the current fiscal year and to 2.8 percent in the upcoming fiscal year.
The fiscal year ends in June.

Given the risks ahead, it is important to ensure close cooperation with multilateral organizations and donors and ensure sufficient budget allocations on health and other priority spending.
The authorities have implemented containment measures and avoided an economic lockdown, but remain vigilant to the risk of spiraling infections and uncertainty surrounding the pandemic.
Recommended immediate priorities include:
- Safeguarding appropriate funding for health and other priority social spending in the FY2020/21 budget.
- Ensuring close cooperation with the World Health Organization, multilateral agencies, and donors.

Structural reforms remain crucial to support a robust economic recovery, with focus on:
- Addressing arrears on VAT refunds and government expenditures.
- Enhancing human capital and the business environment.
- Improving the affordability of bank credit.

IMF Press Release No. 20/240 — June 10, 2020