The International Monetary Fund (IMF)'s executive board has given its approval for the first review of Tanzania's three-year extended credit facility. This grants the East African country immediate disbursement of around $153 million for budgetary support, according to a statement by the IMF.
The organization acknowledged that Tanzania's economic reform program is making good progress, despite a challenging global economic climate, but recommended that the government focus on increasing domestic revenue and implementing structural reforms that streamline bureaucracy and curb corruption in the country.
With this approval, Tanzania has received a total of approximately $305 million out of a $1.04 billion loan arrangement established last in 2022.
"Program performance has been strong. All quantitative performance criteria and indicative targets for December 2022 were met, and two of the three structural benchmarks for December 2022 were completed on time," said Antoinette Sayeh, IMF Deputy Managing Director and acting Chair.
According to her, if Tanzania, whose GDP is expected to grow by 5.7%, concentrates on improving spending efficiency and maximizing domestic revenue mobilization, it will be able to finance important investments and social spending while also ensuring debt sustainability.
"Strengthening public finance management and oversight of state-owned enterprises is critical to contain fiscal risks," and authorities should clear domestic arrears and prevent accumulation of new ones by strengthening cash management and commitment controls, Sayeh said.
She added that Tanzania's risk of falling into debt distress is currently moderate. However, it is crucial to maintain a focus on obtaining low-interest financing and taking measures to contain potential liabilities in order to mitigate any risks.