Tanzania, IMF strike deal, unlocking $440.8 million

Dar es Salaam. Tanzania and the International Monetary Fund (IMF) have reached a staff-level agreement on key economic policies following a mission to the country this month.

The agreement covers the fifth review under the Extended Credit Facility (ECF), the second review under the Resilience and Sustainability Facility (RSF), and the 2025 Article IV consultation.

Subject to approval by the IMF executive board in the coming weeks, the reviews will unlock approximately $440.8 million, bringing total IMF support under the ECF to about $907.4 million, and about $343.6 million under the RSF.

In a statement issued at the conclusion of the mission yesterday, IMF team leader Mr Nicolas Blancher said Tanzania’s economic activity remains strong, with real GDP growth reaching 5.5 percent in 2024 and projected to rise to 6 percent in 2025. “Inflation, at 3.3 percent year-on-year in March, remains below the Bank of Tanzania (BoT) target of 5 percent,” said Mr Blancher.

He noted, however, that the outlook faces downside risks, including uncertainty in the global economy, trade slowdowns, geopolitical tensions, and reduced foreign development assistance.

Domestically, the upcoming general election could exert fiscal pressure and affect reform momentum.

The IMF observed that fiscal consolidation is expected to pause in the 2024/25 financial year, following a supplementary budget adopted in February 2025 that raised public spending by 0.4 percent of GDP. The additional funds are earmarked for education, health, domestic arrears clearance, and other priority areas.

Mr Blancher said it will be crucial for the government to resume growth-friendly fiscal consolidation in 2025/26 to preserve debt sustainability and rebuild fiscal space.

“To this effect, the authorities have committed to reducing the domestic primary deficit by 0.4 percentage points of GDP to 0.8 percent in 2025/26 through revenue measures amounting to 0.9 percent of GDP, while safeguarding priority social spending at 7.1 percent of GDP,” he said.

With inflation contained, the IMF considers the current Central Bank Rate of 6 percent to be neutral or mildly stimulative. The mission called for continued exchange rate flexibility and interventions aligned with the BoT’s foreign exchange policy, noting that recent reforms have increased market liquidity and narrowed the parallel market premium.

The current account deficit narrowed to an estimated 2.6 percent of GDP in 2024, from 3.8 percent in 2023, supported by strong exports of minerals and agricultural products, as well as record-high tourist arrivals. International reserves stood at $5.7 billion in March 2025, equivalent to 3.8 months of import cover.

In discussions under the Article IV consultation, the IMF and Tanzanian authorities reviewed longer-term development prospects under Tanzania Vision 2050. Mr Blancher stressed the need for increased investment in education and health to support the country’s youthful and growing population, alongside private-sector-led job creation.

Reforms to improve access to finance, streamline business regulations, and strengthen judicial and anti-corruption institutions were highlighted as structural priorities.

He also commended the government for progress made under the RSF in strengthening the institutional framework for climate policy and investment planning. Accelerating reform implementation, with support from development partners, will be key to enhancing climate resilience and sustainability.

During the mission, from April 2 to 17, 2025, the IMF team met with the Minister for Finance, Dr Mwigulu Nchemba, BoT governor Emmanuel Tutuba, senior government officials, development partners, private sector stakeholders, and civil society organisations.

Mr Blancher expressed gratitude to the authorities for their hospitality and the constructive discussions.