The International Monetary Fund (IMF) has approved a $900 million financial package for Tanzania to support the country’s budget and bolster its fight against climate change. This funding will provide critical assistance for Tanzania’s economic recovery efforts and address the pressing challenges posed by climate-related issues.
Key Points
- Economic Recovery Support: The IMF’s financial package is designed to support Tanzania’s economic stability and recovery. The country, like many others, has been significantly impacted by the global economic downturn caused by the COVID-19 pandemic. The funding aims to strengthen Tanzania’s fiscal position, ensuring that it can meet its budgetary needs and maintain essential public services.
- Climate Change Mitigation and Adaptation: A significant portion of the IMF’s assistance will be allocated to climate change mitigation and adaptation projects. Tanzania, which is vulnerable to climate-related disasters such as floods and droughts, will use these funds to implement sustainable environmental practices, improve resilience against climate impacts, and transition to a greener economy.
- Infrastructure and Development Projects: The financial package will also support various infrastructure and development projects across Tanzania. These projects aim to boost economic growth, create jobs, and improve living standards. Investments in renewable energy, sustainable agriculture, and water management systems are expected to be key focus areas.
- Strengthening Fiscal Management: The IMF’s support includes measures to enhance Tanzania’s fiscal management and governance. This involves improving tax collection systems, reducing public debt, and ensuring efficient allocation and use of resources. Strengthened fiscal management will help Tanzania achieve long-term economic stability and growth.
- Promoting Inclusive Growth: The IMF’s assistance is geared towards promoting inclusive growth, ensuring that the benefits of economic development reach all segments of the population. Special emphasis will be placed on supporting vulnerable communities, women, and youth, who are often disproportionately affected by economic and climate challenges.
Broader Implications
The approval of this financial package underscores the IMF’s commitment to supporting low-income countries in their recovery and development efforts. It also highlights the growing recognition of the urgent need to address climate change as an integral part of economic planning and international assistance.
Tanzanian authorities are committed to continue implementing reforms to preserve macro-financial stability, strengthen economic recovery, and promote sustainable and inclusive growth, the International Monetary Fund said in a statement.
In the last three years, President Samia Suluhu Hassan’s administration has undertaken various economic reforms with ambitions to return the country’s economic growth to the pre-pandemic real gross domestic product growth rate of six percent to seven percent.
Tanzania’s economic reform programme remained strong, the IMF said, adding that economic growth rebounded in 2023 after slowing down in 2022.
The current account deficit is narrowing, reflecting fiscal consolidation, easing commodity prices, and tight external financing conditions,” the IMF said.
While economic recovery is expected to gain momentum going forward, the IMF noted that it faced headwinds from an “unfavourable global economic environment.
Tanzania’s economy, which relies on tourism, mining, agriculture and manufacturing, has remained resilient in the face of back-to-back extreme weather events and climate change, driven by a surge in the services sector, according to the World Bank.
The economy is forecast to accelerate to 5.4 percent this calendar year, up from 5.1 percent in 2023, minister of state in the president’s Office for Planning and Investment Kitila Mkumbo said last week.
