## IMF Executive Board Completes the First Review Under the Extended Credit Facility Arrangement and Concludes the 2023 Article IV Consultation with Tanzania

_IMF News, April 25, 2023_

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**Canonical URL:** [IMF Executive Board Completes the First Review Under the Extended Credit Facility Arrangement and Concludes the 2023 Article IV Consultation with Tanzania](https://www.imf.org/en/news/articles/2023/04/25/pr-23127-tanzania-board-first-review-and-article-iv)

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## Bibliographic details
- Published: April 25, 2023

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### Program status and disbursement
- The Executive Board completed the first review of the Extended Credit Facility (ECF) Arrangement and the 2023 Article IV Consultation with Tanzania on April 24, 2023.
- The completion of the first review allows the immediate disbursement of SDR 113.37 million (about US$ 153 million).
- Tanzania’s total access under the arrangement following this disbursement is about US$ 304.7 million.
- Tanzania’s three-year ECF Arrangement for a total access of SDR 795.58 million (200 percent of quota—about US$ 1,046.4 million at the time of program approval) was approved on July 18, 2022.
- The arrangement aims to support economic recovery, preserve macro-financial stability, and promote sustainable and inclusive growth.

### Program performance and reforms
- All quantitative performance criteria and indicative targets for December 2022 were met.
- Structural benchmarks:
  - The benchmark to prepare and begin implementing a plan to clear all expenditure arrears was completed ahead of time.
  - The benchmark to submit the amendments to the Banking and Financial Institutions Act to Parliament was completed ahead of time.
  - The benchmark to complete and publish the post-crisis audit of pandemic-related spending and to submit the FY2023/24 preliminary Budget to the Parliament were completed with delay.
- Reform focus areas:
  - Strengthening fiscal space to allow for social spending and high-yield public investment.
  - Enhancing the monetary policy framework and improving financial sector supervision.
  - Advancing structural reforms to promote sustainable and inclusive growth.

### Economic outlook and recent developments
- Growth and output:
  - After a modest recovery to 4.9 percent in 2021, real GDP growth is estimated to have slowed to 4.7 percent in 2022.
  - Growth is expected to recover to 5.2 percent in 2023 as global commodity price shocks subside and the business environment improves.
- Inflation and policy response:
  - Tanzania’s inflation is relatively low, partly reflecting low passthrough.
  - Authorities responded to recent increases in inflationary pressures with temporary fuel and fertilizer price subsidies and tightening of liquidity in the financial system.
- Fiscal policy:
  - The authorities’ draft budget for FY2023/24 is based on conservative revenue and expenditure projections and aims to achieve fiscal consolidation while safeguarding priority social spending.

### IMF policy recommendations and Executive Board assessment
- From Ms. Antoinette Sayeh, Deputy Managing Director and acting Chair:
  - Continue completing the pandemic health and economic response and preserve macroeconomic stability.
  - Enhance domestic revenue mobilization and improve efficiency of expenditures to create fiscal space for priority investment and social spending.
  - Strengthen public finance management and oversight of state-owned enterprises to contain fiscal risks.
  - Clear verified domestic arrears and prevent accumulation of new ones by strengthening cash management and commitment controls.
  - Prioritize concessional financing and ensure fiscal risks from contingent liabilities are well-contained, noting Tanzania's risk of debt distress remains moderate.
  - Bank of Tanzania (BoT) should stand ready to tighten monetary policy as needed while allowing more exchange rate flexibility against external shocks.
  - Complete the transition to an interest rate-based monetary policy to enhance effectiveness.
  - Upgrade the financial supervision framework, including implementing FSAP recommendations, to buttress financial sector stability and promote financial deepening.
  - Streamline bureaucratic procedures, simplify the business regulatory regime, and enhance regulatory transparency to support private sector development.
  - Implement and enforce the authorities’ anti-corruption strategy and establish a risk-based AML/CFT supervisory approach to improve governance and address deficiencies.
  - Increase resilience to climate change through mitigation and adaptation policies.
- Executive Directors:
  - Welcomed policy response to spillovers from the war in Ukraine and commended strong performance under the ECF arrangement.
  - Emphasized continued commitment to reforms to strengthen recovery, preserve macroeconomic stability, and support sustainable and inclusive growth.
  - Supported the authorities’ plan for fiscal consolidation starting in FY2023/24 while protecting the vulnerable.
  - Encouraged enhancing domestic revenue mobilization; improving expenditure efficiency, particularly public investments; strengthening public finance management and transparency (including management of future gas revenues); and containing fiscal risks from SOEs.
  - Urged strengthening cash management and commitment controls to prevent new arrears and looked forward to implementation of audit recommendations for pandemic-related spending.
  - Supported a data-dependent monetary policy, encouraged the BoT to stand ready to tighten further should second-round inflation effects emerge, and emphasized limiting budget financing by the BoT.
  - Called for strengthening financial supervision, allowing more exchange rate flexibility, enhancing transparency in FX operations, and maintaining adequate reserve buffers.
  - Noted Tanzania’s interest in the Resilience and Sustainability Facility.

### Selected economic indicators (FY2020/21–2023/24)
- Output
  - Real GDP growth (%): 4.9; 4.8; 5.0; 5.7
  - Calendar year real GDP growth (%) 1: 4.7; 5.2; 6.1
- Prices
  - Inflation - average (%): 3.3; 4.0; 4.4
- Central government finances
  - Revenue (% GDP): 13.6; 14.8; 15.0; 15.5
  - Expenditure (% GDP): 17.0; 18.2; 18.1
  - Fiscal balance (% GDP): -3.8; -3.5; -3.1; -2.7
  - Public debt (% GDP): 41.3; 42.0; 40.9; 39.2
- Money and credit
  - Broad money (% change): 11.7; 6.5; 10.7; 11.0
  - Credit to private sector (% change): 3.6; 19.4; 19.8; 12.0
- Balance of payments
  - Current account (% GDP): -2.1; -4.6; -4.4; -3.2
  - Reserves (in months of imports): 4.6; 3.8
  - External public debt (% GDP): 29.2; 27.9; 26.9; 25.8
- Exchange rate
  - REER (% change): 2.6; 2.3; ...

Sources: Tanzanian authorities and Fund staff calculations.

*IMF press release, April 24, 2023.*

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## References

- [United Republic of Tanzania and the IMF](http://www.imf.org/external/country/TZA/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [ECF Arrangement](https://www.imf.org/en/News/Articles/2022/07/18/PR22265imfexecutiveboardapproveECFforTanzania)
- [http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2023/04/25/pr-23127-tanzania-board-first-review-and-article-iv_