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Tanzania needs urgent financial support of $1.1 billion (1.5 per cent of its gross domestic product) to mitigate the effects of the novel coronavirus disease (COVID-19) pandemic, according to a new report.
The current account deficit is expected to widen to 4.5 per cent of the country’s GDP in 2021-22 due to continued COVID-19 shock, International Monetary Fund (IMF), a global financial institution, said in its report published September 17, 2021.
Tanzania’s current account balance deteriorated in 2020-21, mainly because of the collapse in tourism receipts that declined by about 55 per cent in the fiscal year. Traditional goods exports (coffee, cotton and tobacco) are estimated to have declined by around 40 per cent due to weak external demand and lower global prices.
The country earned around $874 million from tourism in 2020-21.
The country’s GDP growth rate fell to two per cent in 2020 amid the ongoing COVID-19 pandemic, the World Bank estimated. Business slowed across a wide range of sectors and firms, especially export-oriented sectors such as tourism and manufacturing, it added.
Tanzania’s gross national income per capita had increased to $1,080 in 2019 from $1,020 in 2018.
Bo Li, deputy managing director, IMF, said:
The authorities are implementing a comprehensive pandemic response plan — Tanzania COVID-19 Socioeconomic Response Plan (TCRP) — to address the fallout of the COVID-19 shock. Tanzania requires urgent financial assistance to implement the plan and avert the severe health, social and economic consequences of a reported third wave of the virus.
TCRP encompasses the National Deployment and Vaccination Plan, an outline of the country’s agenda of vaccinating 20 per cent of the population with COVAX, according to the report.
The IMF board has approved $567.25 million in emergency financial assistance September 7 — $189.08 million under the Rapid Credit Facility (RCF) and a purchase equivalent to $378.17 million under the Rapid Financing Instrument (RFI).
These tools will support the authorities’ efforts in responding to the pandemic by addressing the urgent health, humanitarian and economic costs, according to the international financial body.
They will also help catalyse support from development partners, the report mentioned.
The TCRP addresses financing needs in other areas, such as tourism, education, water, and social protection, the paper added. The country needs a financial stimulus of $1.6 billion (or 2.2 per cent of GDP) in FY2021-22 for COVID-19, of which 36 per cent is expected to be financed by the RCF and RFI, the plan estimated.