DAR ES SALAAM (Reuters) – Tanzania has started negotiations with creditors over a G20 initiative on debt relief, the finance minister said on Thursday, as part of efforts to mitigate the economic effects negative results caused by the coronavirus epidemic.
The initiative aims to delay debt repayments from May to December 2020, freeing up cash that governments can use to mitigate the economic impact of COVID-19.
“The richest 20 nations in the world (G-20) have urged official bilateral creditors to provide debt relief to the world’s poorest nations, including Tanzania,” Philip Mpango told parliament.
“The government has started negotiations with creditors to benefit from this initiative.
Mpango told lawmakers that Tanzania and international institutions are discussing access to finance to “fight (the) COVID-19 pandemic to stabilize the economy.”
The government is in talks with the European Union for potential support of 27 million euros and the rapid credit facility from the International Monetary Fund, where Mpango said he could access up to $ 272 million in support from the balance of payments.
The African Development Bank has pledged a concessional loan of $ 50 million as budget support, the finance minister added.
On Wednesday, the IMF announced that it had approved debt relief for Tanzania in the amount of $ 14.3 million over the next four months, and potentially up to $ 25.7 million over the course of over the next 23 months.
Neighboring Kenya has said it will not seek debt relief under the G-20 plan because conditions are too restrictive and this could affect Kenya’s credit rating.
Earlier on Thursday, Mpango said Tanzania expects its economy to grow 5.5% in 2020 from a previous estimate of 4%, after the government took steps to mitigate the economic impact of the coronavirus. , a much more optimistic outlook than the World Bank’s projection of 2.5%.
“This is due to the rains which are destroying the transport infrastructure in the country and the impact of COVID-19 which has affected many countries which are our trading partners,” he said.
In the last budget of this parliament before the general elections in October, Tanzania plans to spend 34 88 trillion tanzanian shillings (15.09 billion dollars) for the fiscal year 2020/21, against 33 110 billion shillings l year before, Mpango said.
The finance minister told parliament that the ratio of total public debt to GDP was 27.1% while external public debt to GDP was 16.3%.
Tanzania plans to borrow a total of 7.94 trillion shillings in domestic and international markets for the next fiscal year, Mpango said.
Reporting by Nuzulack Dausen in Dar es Salaam and Omar Mohammed in Nairobi; Written by Omar Mohammed; Editing by Katharine Houreld, Peter Graff and Jonathan Oatis