The International Monetary Fund (IMF) announced on Monday that its Board of Directors has approved a $1.04 billion loan agreement for Tanzania with a term of 40 months and an immediate disbursement extended line of credit of about $151, 7 million.
The IMF said in a statement that the financing package will support Tanzania’s economic recovery, address the impact of the Russian invasion of Ukraine, help maintain macroeconomic stability and support structural reforms.
“Reforms will focus on strengthening fiscal space for much-needed social spending and high-yield public investment, resuming and advancing the authorities’ structural reform agenda, and strengthening financial stability,” the fund said.
The ECF mechanism, equivalent to 795.58 Special Drawing Rights, or 200% of the country’s quota or IMF share, follows the approximately $561.5 million in IMF emergency assistance in 2021.
The Monetary fund has attempted to convert small-scale COVID-19 support loans into traditional long-term loan packages that require policy reform.
The IMF said the new agreement aims to “catalyze additional bilateral and multilateral financial support” and help attract private sector investment.
The effects of the war in Ukraine have delayed Tanzania’s gradual recovery from the COVID-19 pandemic, the IMF said.
Tanzania faces “significant development and reform challenges and external headwinds, including the scars of COVID-19 and the war in Ukraine, (which) risk eroding hard-won economic gains,” the deputy director said in the IMF statement.