DAR ES SALAAM, Dec 30 (NNN-DAILYNEWS) — TANZANIA’S capacity to repay its debt to the International Monetary Fund (IMF) remains robust, underpinned by a strong track record of servicing obligations and sound economic management practices.
The IMF said in its latest country report No 24/187 issued recently that the country has consistently demonstrated its commitment to meeting debt obligations, with a solid record of timely repayments to the IMF.
“Tanzania’s capacity to repay the Fund (IMF) is adequate and the authorities’ track record of servicing IMF debt is strong,” the Brenton Wood institution said in its latest country report.
The report further said that total debt service obligations to the IMF will peak at 0.3 per cent of GDP (1.1 per cent of exports of goods and services, or 3.3 per cent of gross foreign exchange reserves) in 2030/31.
Additionally, the country’s economic fundamentals are supportive of its repayment capacity.
Strong growth in key sectors such as agriculture, mining and infrastructure development, coupled with prudent monetary policies, has ensured steady foreign exchange inflows.
According to Bank of Tanzania (BoT) latest Monthly Economic Review of November, exports of goods and services increased by almost 13 per cent to 15.497 billion US dollars for the year ending October from the preceding year
“This growth resulted from a strong rebound in tourism and an increase in key export commodities, in particular, gold, tobacco, cashew nuts and horticultural products,” BoT said.
The export of traditional goods increased to 1.148 billion US dollars from 910.2 million US dollars in the year ending last October, driven by tobacco, coffee and cashew nuts.
The increase was also notable in non-traditional exports, which rose to 6.922 billion US dollars from 6.352 billion US dollars with gold accounting for 47.8 per cent.
Export of horticultural products improved to 496.2 million US dollars from 414.6 million US dollars in the year to last October, driven by vegetables.
On month-to-month, exports of goods amounted to 940.4 million US dollars in October, compared with 693.2 million US dollars in a similar period last year. Service receipts increased to 6.95 billion US dollars from 6.041billion US dollars the year ending last October, with earnings from travel (tourism) and transport services backing the performance.
Travel receipts increased by 19.7 per cent to 3.676 billion US dollars, explained by a sustained rise in tourist arrivals that reached 2,095,919 the year ending October following sustained government and private sector promotion efforts.
Additionally, transport earnings, mainly from freight charges, increased to 2.693 billion US dollars from 2.34billion US dollars, mainly due to improvements in ports efficiency and transport infrastructure.
These factors provide confidence that the country is well-positioned to continue honouring its IMF debt commitments without compromising its broader economic stability.
On debt sustainability, IMF said the country latest Debt Sustainability Analysis (DSA) indicates that its risk of external debt distress is moderate, public debt is sustainable and has some space to absorb shocks.
“The DSA remains unchanged,” IMF said, “as there are no significant changes in economic circumstances and borrowing assumptions”.
The quantitative performance criterion (QPC) on the PV of newly contracted external public debt (ceiling) and the indicative target on newly disbursed external non-concessional borrowing (ceiling) are set to be consistent with a moderate risk of external debt distress (i.e., ensure compliance of the relevant thresholds).
“The authorities met the test date targets for the second and third Extended Credit Facility (ECF) Reviews. The end-June 2024 target for the 4th ECF review was also met,” IMF said.
The latest BoT monthly economic review for November shows that the national debt stock registered a monthly decrease of 1.1 per cent, reaching 45.138 billion US dollars at the end of October.
The total external debt constituted 73.1 per cent of the total debt stock.
The stock of external debt decreased by 1.5 per cent to 32.976 billion at the end of October from the level recorded at the end of September. However, the stock of domestic debt increased by 407.48bn/-, reaching 33.023tri/- at the end of October. — NNN-DAILYNEWS
