By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) Wednesday commended the Tanzanian Authorities for their prudent policy management and progress in stabilising its economy as the Fund disbursed an additional US$57 million credit to the Country; bringing total resources available for potential disbursement under the arrangement to SDR 74.6 million (about US$114 million).

This is contained in a Press Statement from the IMF and made available to www.investadvocateng.com in Lagos Nigeria.

Naoyuki Shinohara, IMF Deputy Managing Director and Acting Chair made this commendation following the completion of the fifth review of Tanzania’s economic performance under the Policy Support Instrument (PSI) and the first review under the precautionary Standby Credit Facility (SCF) arrangement.

“The Tanzanian authorities are to be commended for their prudent policy management and progress in stabilising the economy. The overall macroeconomic outlook remains favorable, with buoyant growth and declining inflation. Continued tight fiscal and monetary policies are crucial for securing sustainability.

“The planned tightening of monetary policy is appropriate in view of the remaining inflationary pressures. The authorities are committed to taking additional measures if needed to attain the targeted decline in inflation” Shinohara said.

According to Shinohara, the budget for 2012/13 appropriately balances the country’s development and social spending needs with the debt-stabilising objective.

He affirmed that to preserve the fiscal consolidation path and avoid a build-up of arrears, any revenue shortfalls would be offset by cutbacks in recurrent and non-priority capital expenditures while safeguarding critical social spending. “Any financial support to the energy sector would be accommodated within the existing fiscal framework. An action plan is being finalised to address the financial challenges facing the power utility, preventing costly power outages and large quasi-fiscal losses” the IMF Deputy Director said.

Shinohara further affirmed that structural reforms under the program aim to secure fiscal sustainability and support a strong economic expansion in the medium term. “Priorities include modernising the VAT regime, strengthening public financial management, and improving debt management” he said.

He said Tanzania’s large current account deficit and related vulnerabilities call for readiness to adjust policies in the event of external shocks, with a view to preserving macroeconomic stability and keeping the program on track. “The floating exchange regime would continue to provide helpful flexibility in this regard” Shinohara said.

Following both reviews, the IMF Board also approved the Tanzanian authorities’ request for a waiver of non-observance of the continuous performance/assessment criterion on the ceiling on external non-concessional debt contracted or guaranteed by the government.

According to the IMF the nonobservance would not materially affect the country’s debt sustainability.

Prior to this time, the IMF Executive Board in July 2012 had approved the precautionary 18-month SCF arrangement for Tanzania in an amount equivalent to SDR 149.175 million (about US$228 million).