IMF clears way for US $4.2 million loan

The Executive Board of the International Monetary Fund (IMF) approved on Wednesday a US $4.2-million loan in support of Tanzania's poverty reduction programme. The loan carries an interest rate of 0.5 percent annually and is repayable over 10 years with a 5 1/2-year period on principal payments. Tanzania obtained clearance for the loan with the board's completion of its first review of the country's performance under a $29.3-million poverty reduction and growth facility arrangement. The board's decision will bring to $8.3 million the total amount drawn under the arrangement, the IMF reported. The poverty reduction and growth facility is the IMF’s concessional arrangement for low-income countries. Its programmes are based on a particular country's own poverty reduction plan drawn up by the government, civil society and development partners. The IMF said this was intended to ensure that the porgrammes were consistent with macroeconomic, structural and social policies that foster growth and reduce poverty. IMF Deputy Managing Director and Acting Chairman Agustin Carstens said, "Tanzanian authorities deserve credit for maintaining macroeconomic stability and making substantial progress with structural reforms, which have paved the way for a steady but modest increase in real per capital income combined with low inflation." However, he added: "Despite these achievements, poverty remains widespread, especially in rural areas, and economic development has been uneven across the country." He said that strengthening the business environment and agriculture, as well as managing the macroeconomic impact of high aid flows, would be key to the government's efforts to guarantee growth and reduce poverty further. "Enhancing revenue mobilisation and containing aid dependence will be critical to enhance the robustness of macroeconomic stability," he said. "To this end, the authorities plan to achieve a comprehensive reform of tax policy and tax administration."