IMF tells Tan­za­nia low debt al­lows for more bor­row­ing

East African Business Week - - FINANCE - BY JOHN SAMBO

DAR ES SALAAM, TAN­ZA­NIA---THE Tan­za­nian gov­ern­ment has been given the green­light by the In­ter­na­tional Mon­e­tary Fund (IMF) to bor­row more money for new in­fra­struc­ture since its debt obli­ga­tions are well un­der con­trol.

An IMF team lead by Mauri­cio Vil­la­fuerte, vis­ited Tan­za­nia last month, to con­duct a re­view. In its report it states, ‘It is noted the im­por­tance of mo­bi­liz­ing ex­ter­nal fi­nanc­ing to step up the pace of planned cap­i­tal spend- ing. Tan­za­nia is at low risk of ex­ter­nal debt dis­tress and has room to bor­row ex­ter­nally on con­ces­sional and non­con­ces­sional terms to meet its fi­nanc­ing needs’.

The IMF team was in Dar es Salaam to talk with the au­thor­i­ties on the fifth re­view un­der the Pol­icy Sup­port In­stru­ment (PSI) pro­gram that was ap­proved on July 16, 2014.

The PSI is an in­stru­ment of the IMF de­signed for coun­tries that do not need bal­ance of pay­ments fi­nan­cial sup­port. The PSI helps coun­tries de­sign ef­fec­tive eco­nomic pro­grams that, once ap­proved by the IMF’S Ex­ec­u­tive Board, sig­nal to donors, mul­ti­lat­eral devel­op­ment banks, and mar­kets the Fund’s en­dorse- ment of a mem­ber’s poli­cies

The IMF Mis­sion said in a state­ment ‘No­table progress has been made in step­ping up rev­enue col­lec­tions and, based on data for the first quar­ter, the am­bi­tious pro­gram tar­get for the 2016/17 fis­cal year is within reach. How­ever, cur­rent spend­ing has been lower than pro­grammed.

‘To­gether with the cus­tom­ar­ily slow pace of project im­ple­men­ta­tion at the be­gin­ning of the fis­cal year, this has led to a fis­cal sur­plus in the first quar­ter. In ad­di­tion, liq­uid­ity con­di­tions have been tight con­tribut­ing to up­ward pres­sure on bor­row­ing costs in the econ­omy’.

Tan­za­nian au­thor­i­ties were com­mended for im­prov­ing the ef­fi­ciency of spend­ing, but cau­tioned about not com­pro­mis­ing ser­vice de­liv­ery.

Op­tions for eas­ing liq­uid­ity were of­fered, in­clud­ing lib­er­al­iz­ing fur­ther the cap­i­tal ac­count in line with com­mit­ments un­der the East African Mon­e­tary Union Pro­to­col; ac­quir­ing a sov­er­eign credit rat­ing to ex­pand Tan­za­nia’s op­por­tu­ni­ties to bor­row abroad; and widen­ing the range of mon­e­tary pol­icy tools. ‘The mis­sion wel­comed the adop­tion of the sec­ond Five-year Devel­op­ment Plan. The mis­sion noted that it was es­sen­tial to im­prove the di­a­logue with the pri­vate sec­tor and accelerate re­forms to bol­ster the business en­vi­ron­ment’.

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