Tanzania seeks IMF funds to boost productive sectors
What you need to know:
- The ECF provides medium-term financial assistance to low-income countries with protracted balance of payments problems
Dodoma. Tanzania and the International Monetary Fund (IMF) are reviewing the implementation of the Extended Credit Facility (ECF), potentially paving the way for further financial assistance to stimulate the country’s productive sectors.
The ECF provides medium-term financial assistance to low-income countries (LICs) with protracted balance of payments problems.
Finance minister Mwigulu Nchemba graced the review meeting here yesterday, which brought together experts from the two parties.
The executive board of the IMF approved Tanzania’s ECF arrangement in July 2022 for a total access of about $1.046 billion at the time of programme approval.
Also read: Tanzania to receive Sh2.4 trillion IMF loan
The second review, which was completed late last year, allowed the immediate disbursement of $150.5 million, bringing Tanzania’s total access under the arrangement to about $455.3 million.
The arrangement aims to support economic recovery, preserve macro-financial stability, and promote sustainable and inclusive growth. Reforms centre on strengthening fiscal space, enhancing the monetary policy framework, strengthening financial sector supervision, and advancing structural reforms.
During the review meeting for experts here yesterday, Dr Nchemba thanked the IMF for the role it plays in stimulating Tanzania’s economic growth endeavours.
The support includes the $567 million (about Sh1.3 trillion) loan that Tanzania accessed from the IMF in 2021 under the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) arrangements, which helped Tanzania overcome some of the challenges that emanated from the Covid-19 pandemic.
The IMF is also providing Sh2.8 trillion to Tanzania in seven different phases, covering a three-year period from 2022/23 to 2024/25.
The money, said Dr Nchemba, has helped Tanzania stimulate economic growth by improving the delivery of social services like health, water, agriculture, infrastructure development, and fine-tuning the business environment.
He, however, asked the IMF to help Tanzania access funds through its Resilient and Sustainable Trust (RST).
The IMF’s RST helps low-income and vulnerable middle-income countries build resilience to external shocks and ensure sustainable growth, contributing to their longer-term balance of payments stability. It complements the IMF’s existing lending toolkit by providing longer-term, affordable financing to address longer-term challenges, including climate change and pandemic preparedness.
“My team and I are ready for the negotiations. We are prepared to begin implementing the measures that will help us strengthen our resistance to climate change, as well as the timeline for doing so,” he said.
In his remarks, the leader of the IMF team, Mr Charalambos Tsangarides, commended Tanzania for its ‘creditable’ execution of the ECF programme in line with the conditions that govern it [the ECF].
Responding to Dr Nchemba’s request for funds under the RST window, Mr Tsangarides said Tanzania was in a good position to receive the funds.
He, however, advised Tanzania to conclude the preliminary preparations, which would include an analysis of the country’s policy framework in the fight against climate change, before engaging the IMF in April this year (2024).
