Tanzania Economy Receives International Monetary Fund Assistance

According to a recent report by the East African, the Tanzania economy is set to receive a total of USD 340 million from the International Monetary Fund (IMF) in order to help regulate the depreciating balance of payments.

In a recent statement that was issued from Washington DC, the Tanzanian Finance Minister, Mustafa Mkullo, indicated that these funds would serve as a method to fill the gap that has been growing in the Government’s Foreign Reserves as a result of the current global financial crisis.

For the fiscal year, which ended in February, the gap in Tanzania’s account had continued to widen from USD 1,796.2 million to USD 2,302 million and in an announcement that was made last week, three of the country’s institutions – the Bank of Tanzania (BoT), the Tanzania Investment Centre (TIC) and the National Bureau of Statistics (NBS) – indicated their intention to conduct a joint survey on Foreign Private Investments (FPI) in order to observe the country’s inflows so as to evaluate the overall impact on the economy.

The survey is scheduled to begin early this month and has been designed to help further develop the dialogue between the public and private sectors in order to acquire the appropriate investment properties so as to better the Tanzania investment climate.

The goal in performing this survey is to use the results in order to create a compilation of the balance of payments as well as to determine the country’s International Investment Position (IIP) and to design an effective investment promotion and to help facilitate strategies.

According to the East African, Mr. Mkullo has said that the World Bank has also made plans to award Tanzania a grant in the amount of USD 970 million in order to support its budget in agriculture, irrigation and Tanzania Social Action Fund (TASAF).

“Out of this money,” said Mr. Mkullo, “USD 750 million would be released in the 2009/10 national budget.”

From this grant, the national budget will receive approximately USD 200 million, and the agriculture sector, along with fertilizers and seeds procurement will receive approximately USD 160 million, while the TASAF will be given approximately USD 30 million.

Economic analysts have predicted that the economy of Tanzania will likely suffer along with the rest of the world from the global financial crisis as is indicated by the fact that many of the country’s traditional exports are already feeling the effects of the crisis.

The most recent Bank of Tanzania Monthly Economic Review has indicated that this development in exports has come as a result of an increase in imports, which has outweighed the overall effects of the rise in exports, saying that the imports of goods and services witnessed an increase of USD 1,529.2 million, while exports saw an increase of USD 960.5 million.

According to the report, capital and intermediate goods spurred the recent increase in imports along with a growth in construction, communication and manufacturing activities as well as the high average price of oil for recently ended fiscal year.

“Most of the increase in exports came from manufactured goods,” read the report, “which nearly doubled from USD 360.7 million recorded during the previous year to USD 651.9 million.”

In addition, the overall value of horticultural exports increased from USD 21.3 million to USD 47.8 million, as a result of the expansion in horticultural production along will new investments in the country’s cut flowers and seeds.

Overall, as a result of improved travel and freight, service receipts during this review period increased by 20.6 percent to USD 2,363.9 million.