Tanzania to receive US$567.25 million 'emergency support' from IMF

WASHINGTON, USA

The Executive Board of the International Monetary Fund (IMF) today September 7, approved an emergency financing of US$567.25 million (Tsh 1.315 trillion) to the government of Tanzania to help finance the country’s urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.

The support comes in two categories; disbursement of US$189.08 million under the Rapid Credit Facility (RCF) and a purchase equivalent to US$378.17 million) under the Rapid Financing Instrument (RFI).

Tanzania’s economic outlook has deteriorated due to the impact of the COVID-19 pandemic.

With the collapse in tourism in the wake of travel restrictions, the economy reportedly decelerated to 4.8 percent growth in 2020, and growth is expected to remain subdued in 2021.

The East African country faces an urgent balance of payment need of about 1.5 percent of GDP as the authorities implement a comprehensive plan to mitigate the effects of the pandemic and preserve macroeconomic stability in the face of a reported third wave of the virus.

According to a press release issued by IMF, the disbursement under the RCF and purchase under the RFI will help finance the interventions needed to mitigate the severe socio-economic impacts of the pandemic and help catalyse support from development partners.

The authorities have indicated that they are committed to pursuing economic policies appropriate for addressing the impact of the pandemic and are committed to strengthening coordination and transparency to ensure that RCF and RFI resources are spent on fighting the pandemic. These measures include publishing reports of RCF and RFI resources spent and undertaking a post-crisis audit of all pandemic-related spending.

Following the Executive Board’s discussion, Deputy Managing Director and Chair, Mr. Bo Li, said in a statement that "The COVID-19 pandemic has negatively impacted Tanzania’s macroeconomic outlook, and the health and wellbeing of its population.”

He added that the growth decelerated in 2020 and is expected to remain subdued in 2021, increasing poverty and negatively affecting employment. Tanzania’s risk of external and public debt distress increased to moderate, mainly due to the pandemic’s effect on tourism exports. Tanzania’s macroeconomic outlook hinges on satisfactorily addressing the pandemic, but significant downside risks remain due to uncertainties surrounding the course of the pandemic.

"The authorities are implementing a comprehensive pandemic response plan ‘Tanzania COVID-19 Socioeconomic Response Plan (TCRP)’ to address the fallout of the COVID-19 shock. Tanzania requires urgent financial assistance to implement the plan and avert the severe health, social and economic consequences of a reported third wave of the virus.

He said that emergency support under the Rapid Credit Facility and Rapid Financing Instrument will substantially contribute to filling immediate external financing needs and help catalyse donor support.

“Temporarily loosening macroeconomic and financial policies will mitigate the pandemic’s adverse impact, by deploying a vaccination campaign, increasing health and social spending, and supporting the private sector.” He said adding that prioritizing the health response, strengthening coordination and transparency to ensure that funds received are spent on fighting the pandemic, and regularly and transparently reporting epidemiological data will be critical for the plan’s success.

"Once the crisis abates, the authorities appropriately intend to resume implementing reforms to achieve sustainable and inclusive growth. Their broader policy and reform agenda includes fiscal reforms to avoid domestic arrears and pay tax refunds on time, increasing support for education and health spending, and improvements to the business climate."

For the first time in more than a year, Tanzania released figures on corona virus in June, confirming 100 cases since a third wave of infections began.

President Samia Hassan said the country has budgeted $450 million to buy covid-19 vaccine; the actions that marked a sharp turn from Hassan’s predecessor, the late John Magufuli who downplayed the pandemic.

Tanzania received the first consignment of over one million doses of Johnson & Johnson COVID-19 vaccines from the United States as part of the COVAX arrangement in July and has fully vaccinated 304,603 people (0.54% of the population). - Africa