IMF Executive Board Completes First Review Under the Policy Support Instrument for TanzaniaPress Release No. 10/468
December 3, 2010
The Executive Board of the International Monetary Fund (IMF) has completed the first review under a three-year Policy Support Instrument (PSI) for the United Republic of Tanzania. The Executive Board’s decision was taken on a lapse of time basis.1
The Tanzanian economy performed better than expected in face of adverse shocks, growing at 6½ percent in the fiscal year ending June 2010, due in part to the PSI-supported government economic rescue plan. All quantitative assessment criteria for June 2010 were observed, and structural reforms are advancing at a good pace.
The program for the current fiscal year balances increases in the provision of needed public services, including investment to improve road infrastructure, against risks of crowding out as the recovery in private sector activity takes hold. Public spending will be carefully prioritized to protect key social and investment outlays. The authorities are committed to use non-concessional external borrowing judiciously, in the framework of a sound debt management strategy and a well-crafted public investment plan. To that end, strengthening investment and debt management processes is a priority. Structural reforms will also continue to support financial deepening and enhanced public financial management. Over the medium term, maintaining social gains and the growth momentum will require more wide-ranging fiscal changes, with the objectives of both stepping up domestic revenue mobilization and increasing spending efficiency.
The Executive Board approved a new three year PSI on June 4, 2010 (see Press Release No. 10/227), upon expiration of the previous PSI and completion of the second and final review under a 12-month high access arrangement (SDR 218.79 million) under the Exogenous Shocks Facility, aimed at providing temporary balance of payments support in dealing with the global crisis (see Press Release No. 09/190).
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. A country’s performance under a PSI is reviewed bi-annually.
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.