Tanzania granted financial boost by IMF
Posted Saturday, May 2 2009 at 10:19
Tanzania will be given a total of $340 million by the International Monetary Fund to adjust its depreciating balance of payments.
Finance Minister Mustafa Mkullo said in a statement from Washington DC last week that the money would also be used to fill the widening gap in the Government’s Foreign Reserves especially during the current global financial crisis.
The funding comes at a time Tanzania’s current account is increasingly widening from $ 1,796.2 million to $ 2,302 million for the year ending February 2009.
Last week, three institutions—the Bank of Tanzania (BoT), the Tanzania Investment Centre (TIC) and the National Bureau of Statistics (NBS)—said they would jointly conduct a survey on Foreign Private Investments (FPI) in the country to “monitor its inflows” in order to assess the impact on the economy.
Traditionally, the survey results would be used in balance of payments compilations and for determination of International Investment Position (IIP) in Tanzania as well as designing of effective investment promotion and facilitation strategies.
The survey, which is scheduled to commence in early May and last until 2009, is geared to further enhance public-private sector dialogue and as means of gaining appropriate investment policies aimed at improving the country’s investment climate.
According to Mr Mkullo, the World Bank will also extend to Tanzania a grant amounting to $970 million for budget support in agriculture, irrigation and Tanzania Social Action Fund (TASAF).
“Out of this money, $750 million would be released in the 2009/10 national budget,” he said.
About $200 million would be allocated for the national budget, $160 million to agriculture, fertilisers and seeds procurement. TASAF will be allocated with $30 million.
Analysts predict that Tanzania’s economy, like the rest in the world, is also expected to suffer further from the global financial meltdown, taking into consideration most of the country’s traditional exports are already feeling the heat.
According to the latest Bank of Tanzania Monthly Economic Review, this development is largely due to an increase in imports that outweighed the effects of the rise in exports.
The review says that while imports of goods and services went up by $1,529.2 million exports increased by $960.5 million.
The increase in imports was driven by capital and intermediate goods, in line with the growth of activities in the construction, communication and manufacturing, and high average price of oil for the 12 months ending February.
“Most of the increase in exports came from manufactured goods, which nearly doubled from $360.7 million recorded during the previous year to $651.9 million,” said the report.
The value of horticultural exports rose from $21.3 million to $47.8 million, largely due to the expansion in horticultural production coupled with new investment in cut flower and seeds in the southern part of Tanzania.