IMF Executive Board Approves a 40-month, US$1,046.4 million ECF Arrangement for Tanzania
IMF News, July 18, 2022
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- Published: July 18, 2022
Approval and Financing
- The Executive Board approved 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 and help stimulate private sector investment and catalyze financial support from development partners.
Program Objectives and Reform Focus
- The 40-month financing package will:
- Assist the economic recovery and address the spillovers from Russia’s invasion of Ukraine.
- Help preserve macroeconomic stability.
- Support structural reforms toward sustainable and inclusive growth, drawing on the government’s priorities and the Five-Year Development Plan.
- Reforms will focus on:
- Strengthening fiscal space for much needed social spending and high-yield public investment.
- Resuming and advancing the authorities’ structural reform agenda.
- Strengthening financial deepening and stability.
- The program is centered on supporting recovery from COVID-19 scarring, coping with spillovers from the war in Ukraine, preserving macroeconomic stability, and advancing structural reforms.
IMF Directors’ Assessment and Policy Recommendations
- Directors commended authorities for their economic response to the pandemic and policies to mitigate spillovers from the war in Ukraine, while noting considerable development and reform challenges and external headwinds.
- Directors supported the authorities’ request for an ECF arrangement to meet pressing financing needs and to:
- Catalyze additional external financing.
- Support a gradual recovery while increasing social and development spending.
- Anchor the country’s National Development Plan.
- Policy recommendations and priorities highlighted by Directors:
- Scale up vaccination efforts.
- Rebalance expenditure towards social spending and improve its efficiency and execution.
- Create additional fiscal space by raising government revenue, improving spending quality, and containing fiscal risks from SOEs, PPPs, and local governments.
- Ensure measures to cope with high fuel and food prices are targeted, temporary, and limit non-concessional financing to preserve debt sustainability.
- Continue efforts in fiscal transparency and accountability; welcome progress towards COVID-related transparency commitments.
- Adopt an integrated capacity development strategy to bolster reform efforts.
- Tighten monetary policy as needed while allowing exchange rate flexibility to cushion shocks; strengthen the monetary policy framework and communication strategy.
- Improve financial regulation and supervision and implement the 2018 FSAP recommendations to address financial sector vulnerabilities.
- Further align the AML/CFT framework with FATF guidelines.
- Boost private investment and potential growth through implementation of ambitious reforms, including improvements in human capital and infrastructure spending, and closing remaining gender gaps.
- Improve National Accounts statistics and continue to address climate risks, building on findings from the upcoming C-PIMA.
Selected Economic Indicators, 2020/21—2023/24
- Output
- Real GDP growth (%): 2020/21 Prel. 4.9; 2021/22 Proj. 4.8; 2022/23 5.0; 2023/24 5.8
- Prices
- Inflation - average (%): 2020/21 3.3; 2021/22 4.2; 2022/23 5.3; 2023/24 4.4
- Central government finances (fiscal year)
- Revenue (% GDP): 2020/21 13.7; 2021/22 15.0; 2022/23 15.4; 2023/24 16.1
- Expenditure (% GDP): 2020/21 17.1; 2021/22 17.8; 2022/23 18.7; 2023/24 19.2
- Fiscal balance (% GDP): 2020/21 -3.9; 2021/22 -2.8; 2022/23 -3.3; 2023/24 -3.1
- Public debt (% GDP): 2020/21 41.5; 2021/22 39.5; 2022/23 38.3; 2023/24 37.2
- External debt (% GDP): 2020/21 29.4; 2021/22 27.3; 2022/23 25.8; 2023/24 24.7
- Money and Credit
- Broad money (% change): 2020/21 11.7; 2021/22 9.2; 2022/23 10.3; 2023/24 11.1
- Credit to private sector (% change): 2020/21 3.6; 2021/22 9.1; 2022/23 10.7; 2023/24 11.5
- Balance of payments
- Current account (% GDP): 2020/21 -1.9; 2021/22 -4.5; 2022/23 -4.3; 2023/24 -3.5
- Reserves (in months of imports): 2020/21 4.5
- Exchange rate
- REER (% change): 2020/21 -2.6
Source: Tanzanian authorities and IMF staff estimates and projections.
Content in this bundle
- PR22/265 — Bodi Tendaji ya Shirika la Fedha la Kimataifa