Tanzania last week received $25.7 million under the IMF’s Catastrophe Containment and Relief Trust to cover debt service and fund measures to fight the Covid-19 pandemic.
In a June 10 statement, the IMF Executive Board, approved $14.3 million debt relief to cover Tanzania’s debt service falling due to the international lender to cover four months, from June 10 to October 13. Additional relief covering the next 23 months from October 14 to April 13, 2022 will be granted subject to the availability of resources in the Catastrophe Containment and Relief Trust.
“The debt service relief will help alleviate Tanzania’s balance of payment that stem from the Covid-19 pandemic,” the IMF statement said.
The pandemic has weakened near-term macroeconomic prospects for Tanzania and in almost the entire sub-Saharan Africa.
The country has experienced a drastic reduction in tourism receipts, budget pressures and a projected deceleration of GDP growth from over six per cent to four per cent in the current fiscal year and to 2.8 per cent in the upcoming fiscal year from July, 2020.
“The covid-19 pandemic is having an adverse economic impact on Tanzania, creating an 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 spiralling infections and uncertainty surrounding the pandemic,” said Tao Zhang, IMF deputy managing director and chair of the IMF executive board.
On April 23, President John Magufuli called on the World Bank and other international lenders to write off debts owed by African countries, instead of giving loans to fight the pandemic.
Despite Tanzania’s strong growth performance in 2019, a new World Bank report says its economy will suffer the effects of the Covid-19 pandemic and global economic crisis.
The World Bank in its 14th Tanzania Economic Update, released on June 8, forecasts the country’s economic growth to sharply slow to 2.5 per cent in 2020 from the 6.9 per cent growth the government reported in 2019.