The Executive Board of the International Monetary Fund (IMF) today approved a grant under the IMF’s Catastrophe Containment and Relief Trust (CCRT) to cover Tanzania’s debt service falling due to the IMF from today to October 13, 2020, the equivalent of US$14.3 million (53.37bn).
Additional relief covering the period from October 14, 2020 to April 13, 2022 will be granted subject to the availability of resources in the CCRT, potentially bringing total relief on debt service to the equivalent of about US$25.7 million. The debt service relief will contribute to alleviate Tanzania’s balance of payment needs stemming from the COVID-19 pandemic.
The pandemic has weakened near-term macroeconomic prospects for Tanzania. The country is facing a drastic reduction in tourism receipts, budget pressures, and a projected deceleration of GDP growth from over 6 percent to 4 percent in the current fiscal year and to 2.8 percent in the upcoming fiscal year (the fiscal year ends in June).
Following the Executive Board’s discussion, Mr. Tao Zhang (pictured), Deputy Managing Director and Chair, issued the following statement:
“The COVID-19 pandemic is having an adverse economic impact on Tanzania, creating exceptional fiscal and balance of payments needs. The authorities have implemented containment measures and avoided an economic lockdown. They remain vigilant to the risk of spiraling infections and uncertainty surrounding the pandemic.
“The IMF’s debt service relief under the Catastrophe Containment and Relief Trust will free up public resources to help address the pandemic. The authorities are committed to using the additional resources for their intended purposes and in a transparent manner, including through ex-post audits of COVID-related spending. To deal with the remaining risks, it will be important to safeguard appropriate funding for health and other priority social spending in the FY2020/21 budget, as well as ensure close cooperation with the World Health Organization, multilateral agencies, and donors.
“Looking ahead, structural reforms remain crucial to support a robust economic recovery. The focus includes addressing arrears on VAT refunds and government expenditures, enhancing human capital and the business environment, and improving the affordability of bank credit.
