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The International Monetary Fund (IMF) reached a preliminary agreement with Tanzania on the second review of its Extended Credit Facility (ECF) program. This agreement is the outcome of negotiations and discussions regarding the country’s economic and financial policies that the IMF supports financially.
The International Monetary Fund (IMF) reached a preliminary agreement with Tanzania on the second review of its Extended Credit Facility (ECF) program. This agreement is the outcome of negotiations and discussions regarding the country’s economic and financial policies that the IMF supports financially. The agreement was concluded after a series of meetings held from October 23 to November 3, 2023, between IMF officials and Tanzanian authorities. The discussions centered on the nation’s economic reforms and policy priorities within the forty-month ECF program. The ECF program aims to bolster economic recovery, ensure macro-financial stability, and promote inclusive growth. Tanzania’s recovery from the pandemic has been hampered by a challenging global economic climate and reduced rainfall, affecting the agricultural sector.
The IMF has outlined immediate policy priorities for Tanzania, including increased exchange rate flexibility, monetary policy tightening, and fiscal consolidation while maintaining essential social expenditures. Upon approval by the IMF Executive Board, Tanzania will access approximately USD 150 million, based on the latest exchange rates. This will bring the total financial support under the ECF to around USD 452.7 million.
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Tanzania’s GDP growth decelerated to 4.7% in 2022, down from 4.9% in 2021, due to external economic factors and a decline in agricultural productivity. The IMF projects a recovery starting in 2023, with the condition of continued reform implementation by the Tanzanian government. The Tanzanian government has committed to a fiscal consolidation plan and a rebalancing of spending to prioritize social services.
