IMF Executive Board Approves US$372.4 Million Rapid Credit Facility Disbursement to Tanzania

IMF Executive Board Approves US2.4 Million Rapid Credit Facility Disbursement to Tanzania

F.P. Report

NEW YORK: Tanzania continues to experience substantial challenges from the COVID-19 pandemic and faces an ongoing urgent balance of payments need as the authorities implement a comprehensive emergency response plan, including a vaccination campaign.

•       The IMF approved US$372.4 million in emergency financial assistance under the Rapid Credit Facility (RCF) in an amount equivalent to the recently early repurchased non-concessional financial assistance under the Rapid Financing Instrument (RFI). The fully concessional RCF emergency financing will facilitate the ongoing implementation of the authorities’ pandemic relief plans.

•       The authorities remain committed to strengthening governance and transparency to ensure that the IMF financial resources are efficiently spent on addressing the crisis.

Washington, DC – November 12, 2021: The Executive Board of the International Monetary Fund (IMF) today approved a disbursement equivalent to SDR265.2 million (US$372.4 million or 66.7 percent of quota) under the Rapid Credit Facility (RCF) for Tanzania.1 This RCF disbursement allows Tanzania to take full advantage of its new eligibility to borrow from the Fund fully on concessional terms.

Tanzania continues to contend with the COVID-19 pandemic. Recent reporting of COVID-19 data in Tanzania indicates an increase in the number of cases amid a third wave of the virus, while travel services receipts and travel arrivals continue to remain below pre-pandemic levels. Due to the impact of the pandemic and the collapse in tourism in the wake of travel restrictions, growth reportedly decelerated to 4.8 percent in 2020, and economic performance is expected to remain subdued in 2021.

The RCF disbursement, in an amount equivalent to the previous financial assistance under the RFI, which was repurchased early by the authorities, will continue to help address Tanzania’s urgent balance of payment needs arising from the COVID-19 pandemic and will provide Tanzania with concessional resources needed to take measures to mitigate the severe socio-economic impact of the pandemic. The Fund financing should also help catalyze support from development partners. The authorities have reiterated their commitment to

1 Tanzania’s previous emergency financing under a blended RFI/RCF was approved by the IMF Executive Board in September based on its status as a presumed blender under IMF policies.

Tanzania’s status changed when lending policy reform was adopted in July 2021, after initial technical discussions on the prospective RCF/RFI had begun, but prior to the actual approval of the blended financing on September 7, 2021. Tanzania is now receiving all emergency financing on concessional terms. Also see, “Fund Concessional Financial Support for Low-Income Countries–Responding to the Pandemic”, IMF Policy Paper 2021/23, July 2021.

2 strengthening coordination and transparency to ensure that RCF resources are spent on the response to the pandemic. These measures include publishing reports of RCF resources spent and undertaking a post-crisis audit of all pandemic-related spending.

Following the Executive Board’s discussion, Mr. Bo Li, Deputy Managing Director and Chair, issued the following statement:

“The COVID-19 pandemic continues to take a toll on the Tanzanian people and economy. The authorities are implementing a comprehensive response—Tanzania COVID-19 Socioeconomic Response Plan (TCRP)—to mitigate the health and socioeconomic effects of the pandemic. The macroeconomic outlook depends on its successful implementation, but downside risks remain.

“Tanzania requires urgent financial assistance to implement the TCRP. The Fund’s emergency financing on fully concessional terms will help the country narrow its external

financing gap, support the authorities’ implementation of the TCRP, and help catalyze donor support. Tanzania’s risk of external and public debt distress remains moderate.

“Temporarily loosening macroeconomic and financial policies has helped mitigate the pandemic’s impact and support economic recovery. To ensure the success of the TCRP, the authorities will prioritize the health response, including the vaccination campaign; enhance social safety nets; and strengthen coordination, governance, and transparency of pandemic- related spending.”

The post IMF Executive Board Approves US$372.4 Million Rapid Credit Facility Disbursement to Tanzania appeared first on The Frontier Post.