A team of the International Monetary Fund (IMF), which concluded its visit to Tanzania said it has concluded it review and plans to release $150 million to the East African country.
From May 2-17, 2024, the team has held meetings in Dodoma and Dar es Salaam for the third review under the Extended Credit Facility (ECF). “…the review will make available SDR113.3 million (about US$150 million), bringing the total IMF financial support under the arrangement to SDR455.5 million (about US$604.2 million). The team also discussed the authorities’ request to access under the Resilience and Sustainability Facility (RSF) in the amount of 150 percent of quota (SDR 596.7 million, approximately US$789.6 million),” the IMF said in a statement.
“I am pleased to announce that we have reached staff-level agreement on the policies needed to complete the third review of Tanzania’s ECF-supported program, and on the request to access financial resources from the RSF. The IMF’s Executive Board will discuss these requests in the coming weeks,” said Charalambos G. Tsangarides, who led the team of IMF to Tanzania.
“The Tanzanian economy grew 5.1 percent in 2023 despite headwinds from power outages and strained foreign exchange liquidity that dampened manufacturing and trade activities. Inflation remains within the Bank of Tanzania (BoT) target at 3.1 percent (yoy) although core inflation ticked up to 3.9 percent (yoy) in April 2024. The outlook is favorable with growth expected to pick up to 5.4 percent in 2024 supported by improvements in the business environment and subsiding global commodity prices. Risks to the outlook are tilted to the downside, as intensification of regional conflicts, increased commodity price volatility, abrupt global slowdown, prolonged liquidity issues in the foreign exchange (FX) market, and intensification of floods from El Nino, could weigh negatively on economic outlook.”
“The current account deficit is expected to narrow to 4.3 percent of GDP this fiscal year, from 6.5 percent in FY2022/23. However, external financial conditions are expected to remain tight and pressures in the foreign exchange market are likely to persist. The BoT reiterated its commitment to allow more exchange rate flexibility to revitalize the FX interbank market and ensure a market determined exchange rate, while limiting FX interventions to avoid disorderly market conditions, in line with its intervention policy. To enhance the transparency of its interventions, the BoT will publish the results of its FX auctions. Maintaining a moderately tight monetary policy stance will complement efforts to ease pressures in the FX market, while preserving price stability,” he said.