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Tanzania: IMF applauds Samia stance on Coronavirus

Imf Pic Director of IMF African Department, Mr. Abebe Aemro Selassie

Mon, 5 Jul 2021 Source: thecitizen.co.tz

The International Monetary Fund (IMF) Director of African Department, Mr. Abebe Aemro Selassie, expressed his optimism earlier this week that President Samia Suluhu Hassan is taking the country’s economy in the right direction,

In an exclusive interview with The Citizen, Mr. Selassie said there is light at the end of the tunnel banking his hopes on what he called the right approach in tackling the Covid-19 pandemic which has wreaked havoc on national economies globally.

The interview was held by The Citizen managing editor, Mpoki Thomson, and compiled by a Business Reporter Alex Malanga.

Excerpts:

QUESTION: In the recent meeting with editors, President Samia Suluhu Hassan said her major priority right now is to the economy and addressing the impact of the pandemic. What advice would you give the government to ensure it is on the right path?

ANSWER: Our Managing Director Kristalina Georgieva has been saying that vaccine policy is economic policy. Without that, it is really difficult to see how we can pursue an economic development agenda.

First, we are really pleased to see President Hasan’s focus of getting the pandemic under control.

Second, the pandemic has severely affected people’s lives and livelihoods and, in many counties, reversed recent improvements in poverty reduction. In addition to addressing the health implications of the pandemic (testing, vaccinations, prevention), there is also a need to find ways to reverse some of the increased poverty—targeted social protection programs will make a lot of sense.

I think the government is heading in the right direction to tackle the pandemic with a clear and credible pandemic response plan. The financing we are asked to provide through the Rapid Credit Facility (RCF) is intended to support this initiative.

What is the status of the $571 million loan that Tanzania has applied for from the IMF to help mitigate the adverse effects of the Covid-19 pandemic?

We are working hard to process the RCF loan application in order to build a credible case to present at the IMF Executive Board.

We welcome the fact that a pandemic response plan is currently being finalized, which would indicate the government’s policies and spending priorities to address the impact of the pandemic. This plan will help identify how RCF’s resources are going to be used, and it is necessary in order for us to continue processing the loan request.

So, what you are saying is that issuance of the loan right now depends on the government?

We have to build a credible case that articulates how the loan funds will help support the government’s pandemic response plan.. And wow this plan will integrate into other government policies including the budget—ideally the plan should be incorporated in the budget.

One of the preconditions before you issue a loan is Tanzania being able to make Covid-19-related data public?

To be clear, it was not a condition, but a recommendation.

We welcome the government’s emphasis on scientific and data-based analysis, which was also discussed with the President.

Before you try to solve the problem, you have to understand the magnitude of the problem. One way to understand the situation is to collect COVID-19 testing data and to make it publicly available, as all countries do. We are also encouraging COVID-19 testing to be scaled up.

In 2019, IMF issued a report that criticized the immediate-past Magufuli regime in what was said to be unpredictable policies and statistics. What is your view on some reforms that President Hassan has undertaken compared to the previous regime?

The purpose of my visit is not to assess how economic policies are being implemented. But what I can say is that, in our view, the main threat that Tanzania’s economy is facing right now is the COVID-19 pandemic.

The fact that President Hassan’s administration has zeroed in on tackling the pandemic is very important.

We are also pleased to see that the government is looking for ways to collect COVID-19 data and to make it available. We are also encouraging testing to be scaled up.

What do you think are some of the things that the President needs to do for the country to make progress?

First and foremost, is to establish a clear pandemic response plan. There is also a need to learn from experience from other countries on how they have been tackling the pandemic, including from peers in the region and beyond to see what policies have worked. Financing also comes to help. Some of our recent advice, also appearing in a recent IMF blog, is calling for a significant, upfront, international assistance and an effective region-wide vaccination effort. So that Africa is not left behind. Right now we see a dangerous divergence in terms of vaccine access.

What is your assessment of the current government shift in handling Covid-19?

We are happy with how President Hassan’s administration has been approaching economic and health policies when it comes to Covid-19.

We are pleased to see that the President has formed an independent committee to present recommendations on how to tackle the pandemic, and that a pandemic response plan is under preparation. This is good and encouraging.

Would you say Covid-19 is the biggest challenge the IMF has ever dealt with?

It is fair to say that the global COVID-19 pandemic is the biggest economic and health shock that countries are facing. The COVID-19 pandemic has led to a severe global recession with differential impacts within and across countries, and I would say that it is a crisis like no other.

Does the IMF have any specific plans for Tanzania?

We are working closely with the Tanzanian government to understand the details of the COVID-19 response plan that needs our support, and offer technical advice on the options considered.

But first and foremost, the policy design has to come from the authorities.

The East African countries of Kenya, Tanzania, Uganda, and Rwanda have massively borrowed to mitigate the impact of the pandemic. Do you think this massive borrowing is sustainable?

In the context of the COVID-19 pandemic, the IMF has stepped up its financing to support countries cope with the severe shock to their people’s lives and livelihoods. One such way to provide financing is the Rapid Credit Facility (or RCF)..

This kind of Fund financing is different from market-type borrowing that some countries have been relying on. Our financing is highly concessional, it has a much lower interest rate and longer grace periods than market loans.

So in an emergency situation, when other sources of financing are strained, countries can borrow from the IMF at a minimum cost.

It is really important to distinguish between the rapid emergency type of financing that we have been providing over the last year from other financing in the context of supporting countries’ economic reform programs. Tanzania has asked for is rapid emergency financing. Over the last year, we provided such financing to about 35 countries in SSA, including the likes of Rwanda, Kenya and Uganda.

What measures are in place to ensure the financing you provide is going to be used as planned? Do you have any follow-up systems?

First, as we discussed we ask for a credible and comprehensive plan showing spending initiatives that the government is going to pursue to address the impact of the pandemic. This plan has to indicate how the resources are going to be used. Ideally, this plan needs to be incorporated in the budget.

Secondly, we ask countries to “spend but keep the receipts”. The IMF is emphasizing the transparent and accountable use of emergency financing, including through national audit processes to ensure that money has been spent well as intended.

Again, showing exactly to the public how money is being used is part of strengthening good governance in countries.

What is your advice on whether Tanzania should adopt the use of cryptocurrency or not?

There is globally a lot of excitement about crypto assets, and we understand the curiosity and why countries may be interested. It is good to understand what is going on, what the debate is all about, and what use we could one country, given its circumstances, make of this technology.

On the question about the use of cryptocurrency, it is a bit premature to say.

Why? Because security features are not clear, there are a lot of complications that suggest the type of tech is not ripe to be used across the board in our economies. Crypto assets can pose significant risks, and effective regulatory measures are very important when dealing with them.

As the IMF director for Africa, what is your message to Tanzania?

As I said before, I have come here to listen and try to understand the President’s vision and how we could provide our support. Secondly, we have come to show that we stand fully behind the people of Tanzania as we have the rest of the world to help address the pandemic effect.

Source: thecitizen.co.tz