UPDATE 3 – Tanzania turns to IMF loan, boosting government spending by 4%

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(Updates with comments from a government spokesman)

DAR ES SALAAM, June 10 (Reuters) – Tanzania has asked the International Monetary Fund for a $ 571 million loan to help it tackle the problems caused by the COVID-19 pandemic, Tanzania’s finance minister said Thursday, increasing spending in the budget by in the next fiscal year.

Tanzania, which denied the existence of COVID-19 under late President John Magufuli last year, has begun to acknowledge the crisis and its impact after President Samia Suluhu Hassan came to power in March.

“This is a low interest rate loan to cope with the social and economic impact of COVID-19,” Finance Minister Mwigulu Nchemba told parliament when presenting the government budget for the 2021/22 (July-June) fiscal year.

IMF officials in Dar es Salaam and Washington confirmed the talks, adding that the government, which has not released data on coronavirus infections since May last year, will have to provide this information.

“When applying for pandemic emergency funding, evidence of a pandemic must be available to substantiate the claim,” IMF Resident Representative Jens Reinke told Reuters.

“Let’s wait for the government’s announcement shortly after the special committee on COVID-19 formed by the president makes its recommendations,” said government spokesman Gerson Msigwa. “He will have answers to all these questions.”

Hasan charted a course change in the fight against coronavirus from Magufuli, who underestimated the pandemic and expressed skepticism about COVID-19 vaccines.

The government plans to spend 36.33 trillion shillings ($ 15.71 billion) in the fiscal year beginning next month, Nchemba said in a budget statement, up 4% from the current fiscal year.

It will be funded by local revenues and borrowing, he said, adding that the economy is likely to grow faster this year after growth was curbed last year by the pandemic.

Nchemba said during his budget statement that Tanzania’s economy is projected to grow 5.6% in calendar 2021 – up from 4.8% last year – and 6.2% in 2023. He did not give forecasts for 2022.

The minister said Tanzania plans to obtain a sovereign credit rating in order to gain access to international capital markets. (1 dollar = 2,313,0000 Tanzanian shillings) (Reporting by Omar Mohammed in Nairobi and Nuzulak Dausen in Dar es Salaam; text by Omar Mohammed; editing by Alexandra Hudson and Peter Cooney)

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