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Tanzania turns to IMF loan, boosts government spending by 4%

06/10/2021 | 04:02pm EDT
IMF logo is seen outside the headquarters building in Washington

DAR ES SALAAM (Reuters) -Tanzania has asked the International Monetary Fund for a $571 million loan to help it tackle the challenges caused by the COVID-19 pandemic, its finance minister said on Thursday as he raised spending in the budget for the next financial year.

Tanzania, which under late President John Magufuli had denied the existence of COVID-19 last year, has started acknowledging the crisis and its impact, after President Samia Suluhu Hassan took over in March.

"This is a low interest-rate loan to tackle the social and economic impact of COVID-19," Finance Minister Mwigulu Nchemba told parliament while presenting the government's budget for the 2021/22 (July-June) fiscal year.

IMF officials in Dar es Salaam and Washington confirmed the talks, adding that the government, which has not published data on coronavirus infections since May last year, will be required to provide that information.

"When applying for pandemic-related emergency financing, evidence of the pandemic has to be available to substantiate the claim," the IMF's resident representative, Jens Reinke, told Reuters.

"Let's wait for the government's announcement, which will come soon, after the COVID-19 special committee formed by the president issued its recommendations," said government spokesman Gerson Msigwa. "It will have answers on all those areas."

Hassan has charted a change of course in tackling the coronavirus from Magufuli, who underplayed the pandemic and expressed scepticism about COVID-19 vaccines.

The government plans to spend 36.33 trillion shillings ($15.71 billion) in the fiscal year starting next month, Nchemba said in the budget statement, a 4% increase from the current financial year.

It will be funded by a mix of local revenue and borrowing, he said, adding that the economy is likely to grow faster this year, after growth was curbed by the pandemic last year.

Nchemba said during the budget speech that Tanzania's economy was projected to grow by 5.6% in calendar 2021 - up from last year's growth of 4.8% - and 6.2% in 2023. He did not give a projection for 2022.

Tanzania plans to seek a sovereign credit rating to give it access to international capital markets, the minister said.

($1 = 2,313.0000 Tanzanian shillings)

(Reporting by Omar Mohammed in Nairobi and Nuzulack Dausen in Dar es Salaam; Writing by Omar Mohammed; Editing by Alexandra Hudson and Peter Cooney)

By Nuzulack Dausen

ę Reuters 2021
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