Tanzania reaps $148.6 million IMF support amid strong economic recovery

Dar es Salaam. The International Monetary Fund (IMF) has completed the fourth review of Tanzania’s Extended Credit Facility (ECF) arrangement, granting the country immediate access to $148.6 million.

This brings total disbursements under the ECF programme, approved in July 2022, to $754.3 million.

The programme, which has a total access limit of $1.046 billion, aims to support Tanzania’s economic stability, recovery, and sustainable, inclusive growth.

The IMF Executive Board also reviewed the Resilience and Sustainability Facility (RSF) arrangement, approved in June 2024, providing an additional $55.9 million to support Tanzania’s climate reforms.

The RSF, totalling $791.6 million, is designed to address the economic risks associated with climate change while bolstering Tanzania’s resilience.

According to the IMF, Tanzania’s economy continues to show significant progress, with GDP (Growth Domestic Product) growth accelerating to 5.4 percent in the first half of 2024, compared to 5.1 percent in 2023.

Inflation remains under control, and the fiscal deficit has narrowed due to robust service exports and moderated imports.

Pressures in the foreign exchange market have eased, supported by seasonal current account flows, tight monetary policies, and a flexible exchange rate framework.

The IMF praised Tanzania’s ongoing fiscal consolidation efforts, emphasising the importance of maintaining priority social spending while creating fiscal space and safeguarding debt sustainability.

The ECF review highlighted a mixed performance in meeting structural benchmarks, with some delayed or incomplete reforms.

Authorities have committed to resetting certain benchmarks to March 2025 to ensure timely completion.

According to the IMF board’s RSF review, Tanzania’s ambitious climate reform agenda is expected to attract additional financial and technical support.

These reforms aim to enhance climate resilience, align with global sustainability goals, and support inclusive economic growth.

The IMF forecasts continued economic growth for Tanzania in the medium term, contingent on the steadfast implementation of fiscal and structural reforms.

Key priorities include enhancing revenue mobilisation, improving public financial management, and fostering an environment conducive to private sector growth.

The Deputy Managing Director and Acting Chair of the IMF, Mr Bo Li, commended Tanzania’s progress, stating, “Efforts to improve domestic revenue mobilisation, strengthen fiscal discipline, and deepen financial market operations are crucial for long-term stability. Enhancing governance and tackling obstacles to foreign investment will promote a business-friendly environment and inclusive growth.”

The IMF advised the Bank of Tanzania (BoT) to continue strengthening its monetary policy framework and enhance foreign exchange market operations to ease future pressures.

It also stressed the importance of implementing anti-money laundering and counter-terrorism financing (AML/CFT) standards to ensure financial stability.

On structural reforms, the IMF urged Tanzania to prioritise governance, anti-corruption measures, and the removal of regulatory barriers to foreign investments.

Additionally, closing gender gaps and improving social development indicators remain critical for fostering inclusive growth.

Tanzania’s Finance Ministry's Head of Communications unit, Mr Ben Mwaipaja, said in an interview with The Citizen that they commend and are very thankful for the decision made by the IMF Board of Directors, as well as for the Board's compliments on our strong programme performance and commitment.

“We will strive to strengthen revenue mobilisation to support the reform agenda and continue to support critical expenditures in education, health, and infrastructure for sustainable and inclusive growth,” he said.

The IMF reaffirmed its commitment to support Tanzania through financial assistance and capacity-building initiatives.

The organisation also noted that the RSF arrangement is expected to catalyse further investments from both public and private sectors to address climate challenges and accelerate economic transformation.

Tanzania’s strong growth trajectory and reform commitments signal a positive outlook, but the IMF cautioned against downside risks, underscoring the importance of sustained policy implementation to achieve long-term economic stability.