Washington D.C., 19 July 2022 (TDI): The International Monetary Fund on Monday said it had approved a $1.4 billion loan for Tanzania.
It is a 40-month extended credit facility loan arrangement. IMF assured of immediate disbursement of about $151.7 million for Tanzania.
The IMF Executive Board has approved a $1.046 billion financing package to support Tanzania’s economic program over 40 months. The program’s goals are to preserve macroeconomic stability and implement reforms for sustainable and inclusive growth. https://t.co/AKN1QXzhmq pic.twitter.com/oVpn5EPIf9
— IMF Africa (@IMFAfrica) July 18, 2022
Spillovers from Russia-Ukraine War
The loan will help Tanzania to cope with the consequences of the Russian-Ukraine war. The 40-month package will assist with economic recovery. It will also help address the repercussions of Russia’s invasion of Ukraine on the East African nation.
Furthermore, the loan will enhance macro-economic stability and underpin structural reforms, the IMF said Monday in an emailed statement.
The Spillovers from the war in Ukraine are stalling the Tanzanian economy’s gradual recovery from the Covid-19 pandemic. They are exacerbating the country’s development and reform challenges to unleash its economic potential.
Tanzania faces “considerable development and reform challenges and external headwinds, including COVID-19-induced scars and the war in Ukraine, (that) risk eroding hard-won economic gains,” IMF Deputy Managing Director Bo Li said in the IMF statement.
The war in Ukraine has caused food and fuel prices to soar worldwide, and the rise in wheat prices is “particularly worrying,” said the IMF in a recent report entitled ‘A new shock and little room for maneuver.’
The IMF said the new arrangement “is expected to catalyze additional bilateral and multilateral financial support” and help attract private sector investment.
Extended Credit Facility and Government Response
The project, which is part of the Extended Credit Facility (ECF), should help finance reforms to improve Tanzania’s financial stability, carry out public investments and support the private sector.
Tanzania government has also outlined that it will use the U.S.$576 million Rapid Credit Facility (RCF) from the International Monetary Fund (IMF) to implement development projects in the education, water, health, and tourism sectors.
Meanwhile, the President of Tanzania, Samia Suluhu Hassan, warned that she would not tolerate the misappropriation of the funds.