Tanzania's economic reform program has received approval from the executive board of the International Monetary Fund (IMF), which has allowed for the immediate disbursement of approximately $153 million in budgetary support. This is the first review of Tanzania's three-year extended credit facility.
Despite the challenging global economic environment, the IMF has reported that Tanzania's economic reform program is progressing well. However, the authorities must increase domestic revenues and continue with structural reforms to combat corruption and streamline bureaucracy.
According to the IMF, the decision to approve the extended credit facility brings total disbursements for Tanzania to about $305 million, of the $1.04 billion loan arrangement approved last year. The IMF's Deputy Managing Director, Antoinette Sayeh, praised Tanzania's strong program performance, with all quantitative performance criteria and indicative targets for December 2022 being met. Additionally, two out of three structural benchmarks for December 2022 were completed on time.
Sayeh emphasized the importance of improving spending efficiency and domestic revenue mobilization, which would enable Tanzania to finance priority investment and social spending while ensuring debt sustainability. She also highlighted the need to strengthen public finance management and oversight of state-owned enterprises to contain fiscal risks. Authorities must clear domestic arrears and prevent new ones from accumulating by strengthening cash management and commitment controls.
According to Sayeh, Tanzania's risk of debt distress is moderate, but it is crucial to continue prioritizing low-interest financing and ensuring that potential liability risks are well-contained.