Press Release: IMF Executive Board Completes Sixth Review Under the Policy Support Instrument, First Review Under the Exogenous Shock Facility for Tanzania
November 24, 2009Press Release No. 09/428
November 24, 2009
The Executive Board of the International Monetary Fund (IMF) has completed the sixth review under a three-year Policy Support Instrument (PSI) for the United Republic of Tanzania and the first review under the Exogenous Shock Facility (ESF). The completion of the ESF review makes available a disbursement of SDR 39.78 million (US$63.40 million). The Executive Board’s decision was taken on a lapse of time basis.1
After several years of high growth and strong macroeconomic performance, the Tanzanian economy is affected by the global economic crisis, which is compounding challenges in food security, poverty alleviation, and building infrastructure. Growth is expected to slow to a projected 5 percent in 2009, from 7.1 percent on average in the last three years. However, all assessment/performance criteria for end-June were met for the PSI/ESF review, and there has been good progress in implementing structural reforms. The authorities’ forward-looking policy framework incorporates additional fiscal and monetary stimulus to support growth and there are early signs of a nascent recovery. Nevertheless, fiscal revenues remain weak and it will be important to preserve control over expenditures particularly given the need to respond to the drought in the region and address infrastructure weaknesses.
The Executive Board approved a one-year arrangement under the high access component of the ESF in the amount of SDR 218.79 million on May 29, 2009 (see Press Release No. 09/190 ). The PSI was originally approved on February 16, 2007 (see. Press Release No. 07/26), and has been extended through end-May 2010.
The IMF’s framework for PSIs is designed for low-income countries that may not need IMF financial assistance, but still seek close cooperation with the IMF in preparation and endorsement of their policy frameworks. PSI-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners. The ESF is designed to provide policy support and financial assistance to low-income countries facing exogenous but temporary shocks.
Tanzania, which became a member of the IMF on September 10, 1962, has a Fund quota of SDR 198.90 million.
1 The Executive Board takes decisions under its lapse of time procedures when it is agreed by the Board that a proposal can be considered without convening formal discussions.