Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved today
a 40-month extended arrangement under the Extended Credit Facility (ECF)
for Tanzania, with access equivalent to SDR 795.58 (200 percent of quota,
equivalent to US$1,046.4 million). The Board’s approval allows for an
immediate disbursement equivalent to US$151.7 million. The ECF arrangement
follows Fund emergency support to Tanzania in 2021 (100 percent of quota,
equivalent to US$561.5 million). The arrangement is expected to catalyze
additional bilateral and multilateral financial support.
Spillovers from the war in Ukraine are stalling the Tanzanian economy’s
gradual recovery from the COVID-19 pandemic, exacerbating the country’s
development and reform challenges to unleash its economic potential. The
ECF arrangement is centered on supporting the economic recovery from the
scarring effects of COVID-19 and coping with spillovers from the war in
Ukraine; preserving macroeconomic stability; and advancing the structural
reform agenda toward sustainable and inclusive growth. The program draws
from the key priorities of the government’s Five-Year Development Plan. IMF
financial support is also expected to help stimulate private sector
investment and catalyze financial support from development partners.
Following the Executive Board discussion, Mr. Bo Li, Deputy Managing
Director and Acting Chair, made the following statement:
“Executive Directors commended the authorities for their economic response
to the pandemic and the policies enacted to mitigate the spillovers from
the war in Ukraine. Directors noted, however, that considerable development
and reform challenges and external headwinds, including COVID-19 induced
scars and the war in Ukraine, risk eroding hard-won economic gains. Against
this backdrop and recognizing Tanzania’s strong track record in reform
implementation, Directors supported the authorities’ requests for an ECF
arrangement to meet pressing financing needs. They underscored that the
Fund supported program would help catalyze additional external financing,
support a gradual recovery while increasing social and development
spending, and anchor the country’s National Development Plan. Directors
also noted the importance of scaling up vaccination efforts.
“Directors welcomed the authorities’ commitment to rebalance expenditure
towards social spending and improve its efficiency and execution. They
highlighted that creating additional fiscal space for priority spending
requires raising government revenue, improving spending quality, and
containing fiscal risks from SOEs, PPPs, and local governments.
Ensuring that measures to cope with high fuel and food prices are
targeted, temporary, and limiting non-concessional financing
will also be important to preserve debt sustainability.
Directors welcomed progress towards COVID-related transparency commitments
and encouraged continued efforts in fiscal transparency and accountability.
Directors also emphasized the importance of an integrated capacity
development strategy to bolster far-reaching reform efforts.
“Directors welcomed the authorities’ commitment to tighten monetary policy
as needed, while allowing exchange rate flexibility to cushion shocks.
Directors looked forward to further strengthening of the monetary policy
framework and noted that a strong communication strategy would be needed.
Improving financial regulation and supervision and implementing the 2018
FSAP recommendations would be important to address financial sector
vulnerabilities. Further actions to align the AML/CFT framework with FATF
guidelines are also needed.
“Noting the need to boost private investment and potential growth,
Directors encouraged the authorities to implement their ambitious reform
agenda, including improvements in human capital and infrastructure
spending, and close any remaining gender gaps. Improving National Accounts
statistics is also important. They also stressed the need to continue to
address climate risks, building on the findings from the upcoming C-PIMA.”
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Tanzania: Selected Economic Indicators,
2020/21—2023/24
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2020/21
Prel.
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2021/22
Proj.
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2022/23
Proj.
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2023/24
Proj.
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Output
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|
|
|
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Real GDP growth (%)
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4.9
|
4.8
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5.0
|
5.8
|
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Prices
Inflation - average (%)
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3.3
|
4.2
|
5.3
|
4.4
|
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Central government finances (fiscal
year)
|
|
|
|
|
|
Revenue (% GDP)
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13.7
|
15.0
|
15.4
|
16.1
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Expenditure (% GDP)
|
17.1
|
17.8
|
18.7
|
19.2
|
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Fiscal balance (% GDP)
|
-3.9
|
-2.8
|
-3.3
|
-3.1
|
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Public debt (% GDP)
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41.5
|
39.5
|
38.3
|
37.2
|
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External debt (% GDP)
|
29.4
|
27.3
|
25.8
|
24.7
|
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Money and Credit
Broad money (% change)
|
11.7
|
9.2
|
10.3
|
11.1
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Credit to private sector (% change)
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3.6
|
9.1
|
10.7
|
11.5
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Balance of payments
Current account (% GDP)
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-1.9
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-4.5
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-4.3
|
-3.5
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Reserves (in months of imports)
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4.9
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4.5
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4.2
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4.4
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Exchange rate
REER (% change)
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-2.6
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…
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…
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…
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Source: Tanzanian authorities and IMF staff estimates and
projections.
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