The International Monetary Fund (IMF) has reached a staff-level agreement to provide US$ 150 million to Tanzania, subject to approval by the IMF Executive Board.
- This brings the total IMF support to Tanzania, under the Extended Credit Facility (ECF), to US$ 604.2 million.
- During meetings held in Dodoma and Dar es Salaam from May 2 to 17, 2024, the IMF team also discussed the authorities’ request to access US$ 789.6 million under the Resilience and Sustainability Facility (RSF).
- The RSF will support the authorities’ effort to address climate policy challenges and implement reforms to enhance the resilience and sustainability of the Tanzanian economy.
“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 Tsangarides, IMF mission chief for Tanzania.
According to the Fund, Tanzania’s economy grew 5.1 percent in 2023 despite shocks from power outages and strained foreign exchange liquidity that dampened manufacturing and trade activities.
Nevertheless, inflation remains within the Bank of Tanzania (BoT) target at 3.1 percent (YoY) although core inflation rose to 3.9 percent (YoY) in April 2024.
IMF further says 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.”
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