- The IMF and Tanzanian authorities have reached staff-level agreement on the fifth review under the Extended Credit Facility (ECF) and the second review under the Resilience and Sustainability Facility (RSF). Once approved by the IMF Executive Board, Tanzania will gain access to US$441 million in financing.
- Tanzania's economic outlook is favorable, with robust growth, low inflation, an improved current account, and increased foreign exchange liquidity. In FY25/26, well-balanced public revenue measures are expected to maintain fiscal and debt sustainability, while safeguarding priority social spending.
- Continuing implementation of climate adaptation and mitigation policies, supported by the RSF, will help strengthen resilience to climate-related risks.
Washington, DC: A staff team from the International Monetary Fund (IMF) led by Mr. Nicolas Blancher, visited Tanzania during April 2-17, 2025, and held discussions on the 2025 Article IV consultation, the fifth review under the Extended Credit Facility (ECF), and the second review under the Resilience and Sustainability Facility (RSF). Subject to approval by the IMF Executive Board, the reviews will make available SDR 326.47 million (about US$440.8 million), bringing the total IMF financial support under the ECF arrangement to SDR 682.21 million (about US$907.4 million), and SDR 255.72 million (about US$343.6 million) under the RSF.
At the conclusion of the mission, Mr. Blancher issued the following statement:
"I am pleased to announce that the IMF team and the Tanzanian authorities have reached a staff-level agreement on the policies needed to complete the fifth review under Tanzania's ECF-supported program, and the second review of the RSF arrangement. The IMF's Executive Board will discuss these reviews in the coming weeks.
"Tanzania's economic activity has been strong, with real GDP growth reaching 5.5 percent in 2024 and projected to increase to 6 percent in 2025. Inflation, at 3.3 percent in March (yoy), has remained subdued and below the Bank of Tanzania (BoT) target of 5 percent. While the economic outlook is favorable, risks are tilted to the downside. The external environment is uncertain, with risks from a slowdown in the global economy and trade, geoeconomic fragmentation, further intensification of the conflict in the DR Congo, and reduced foreign development assistance. On the domestic front, the upcoming national elections may increase risks of fiscal pressures or, more broadly, reform slowdown.
"Fiscal consolidation is expected to pause in FY24/25 with the adoption of a supplementary budget in February 2025 aimed at increasing public spending by about 0.4 percent of GDP relative to the initial budget, through higher expenditures on education and health, clearance of domestic arrears, and other priority areas. It will be essential to resume growth-friendly fiscal consolidation in FY25/26 to preserve debt sustainability and rebuild fiscal space, especially in light of pressing social spending needs. To this effect, the authorities are committed to reducing the domestic primary deficit by 0.4 percentage points of GDP to 0.8 percent in FY25/26 through revenue measures yielding 0.9 percent of GDP, while safeguarding priority social spending at 7.1 percent of GDP.
"With inflation remaining below the BoT's 5 percent target maintaining the CBR at 6 percent, a level which the mission considers to be neutral or mildly stimulatory, will help preserve price stability in the period ahead. It will also be important to continue allowing exchange rate flexibility and conducting FX interventions in line with the BoT's FX intervention policy. Increased tolerance for exchange rate flexibility, together with reforms to improve the functioning of the foreign exchange market, have been successful in bringing back FX flows into the formal market, increasing its liquidity and reducing the parallel market premium.
"The current account deficit is estimated to have narrowed to 2.6 percent of GDP in CY2024, from 3.8 percent of GDP in CY2023. This was driven by strong exports of minerals and agricultural products, as well as record tourist arrivals, against a moderate increase in imports of capital goods and declining oil imports. In 2025, high gold prices are expected to support the export momentum and help further reduce the current account deficit. Gross international reserves stood at an adequate level of US$5.7 billion (about 3.8 months of imports) in March 2025."
"In the context of the Article IV consultation, the mission was also an opportunity to discuss longer-term prospects for the Tanzanian economy with a range of government and other counterparts. To meet the ambitious goals laid out in the Tanzania Vision 2050, it will be critical to ensure that sufficient resources are dedicated to the education and health of a young and rapidly growing population, and to create an enabling environment for private sector-led growth and job creation. In particular, further efforts to improve the availability and access to finance, streamline business regulations, and strengthen judicial and anti-corruption institutions, are key structural reform priorities.
"Continuing the implementation of climate reforms, supported by the RSF, will enhance climate resilience and sustainability. The government has already started to strengthen the institutional framework for climate policies and public investment management in line with climate risks. Accelerating implementation of RSF reforms with technical and financial assistance from the IMF, the World Bank and other development partners, will help build resilience and catalyze support for the climate agenda in Tanzania.
"The mission met with Minister of Finance, Dr. Mwigulu Nchemba, Bank of Tanzania Governor, Mr. Emmanuel Tutuba, other senior officials, development partners, private sector representatives, and civil society organizations. The IMF team would like to thank the Tanzanian authorities and other counterparts for their hospitality, and the candid and productive discussions."
