IMF and Tanzania agreement under ECF and RSF programs

Tanzania has recently reached a staff-level agreement with the International Monetary Fund (IMF) on the fourth review under the extended credit facility (ECF) and the first review under the resilience and sustainability facility (RSF). Sebastian Acevedo, IMF Resident Representative for Tanzania, highlighted the positive performance of Tanzania's economy, pointing out the country's strong economic growth and resilience despite external pressures. The IMF has commended Tanzania for its commitment to implementing reforms aimed at sustainable economic growth. One of the key policy reforms suggested by the IMF for Tanzania includes maintaining low inflation rates and gradually reducing the fiscal deficit while protecting social spending in sectors like education, health, and social protection. Tanzania's success in keeping inflation under control, with rates remaining around 3 percent, has contributed to the positive outlook for the economy. Additionally, the Tanzanian authorities have shown progress in allowing more flexibility in the foreign exchange market and implementing reforms to align with international best practices. The IMF has also advised Tanzania to continue improving its coordination and governance of climate policies, strengthen disaster risk management and financing, and incorporate climate policies in budgeting and public investment planning. These structural reforms under the RSF aim to build resilience to climate change, reduce the impact of climate-related disasters, and signal Tanzania's commitment to addressing environmental challenges. While Tanzania has shown strong performance under the IMF-supported program, the country is encouraged to maintain its momentum and implement further reforms to secure sustainable economic growth. The recent staff-level agreement marks a significant step towards enhancing Tanzania's economic stability and attracting future development partners' assistance and financing. Sebastian Acevedo emphasized the importance of continuing to address challenges in the foreign exchange market and further enhancing policy flexibility to support economic growth. Tanzania's commitment to ongoing reforms and sustainable development efforts bode well for the country's economic future, with the IMF's support playing a crucial role in facilitating key policy changes and structural reforms.