Katoto Kadogo
Member
- Jul 3, 2015
- 28
- 72
Tanzania's central bank has made a significant move by agreeing to allow more exchange rate flexibility and reduce its foreign exchange interventions under a new and crucial agreement with the International Monetary Fund (IMF).
The IMF has applauded the proactive step taken by the Bank of Tanzania (BoT) to increase transparency in the interbank foreign exchange market (IFEM) by announcing that it will begin publishing the results of its foreign exchange auctions.
The BoT has pledged to increase exchange rate flexibility to rejuvenate the FX interbank market and ensure the exchange rate is market-determined while limiting interventions to avoid market disruptions, per its policy.
To boost transparency, the BoT will release the results of its FX auctions.
The IMF has projected that this agreement will open up significant opportunities for Tanzania, enabling it to access nearly $790 million in climate financing through the Resilience and Sustainability Facility (RSF) and unlock $150 million under the Extended Credit Facility (ECF) arrangement.
Maintaining a moderately tight monetary policy will help reduce pressures in the FX market and maintain price stability.
According to the IMF, Tanzania's economy grew by 5.1% last year and is projected to grow by 5.4% in 2024, supported by improvements in the business environment and declining global commodity prices.
However, this outlook is not without risks, including regional conflicts, fluctuating commodity prices, a sudden global slowdown, ongoing issues in the foreign exchange market, and increased flooding from El Nino, which could negatively impact the economy.
This agreement was reached following discussions between an IMF team led by Charalambos Tsangarides, the IMF mission chief for Tanzania, and senior government officials, including Finance Minister Mwigulu Nchemba and BoT Governor Emmanuel Tutuba.
The IMF has applauded the proactive step taken by the Bank of Tanzania (BoT) to increase transparency in the interbank foreign exchange market (IFEM) by announcing that it will begin publishing the results of its foreign exchange auctions.
The BoT has pledged to increase exchange rate flexibility to rejuvenate the FX interbank market and ensure the exchange rate is market-determined while limiting interventions to avoid market disruptions, per its policy.
To boost transparency, the BoT will release the results of its FX auctions.
The IMF has projected that this agreement will open up significant opportunities for Tanzania, enabling it to access nearly $790 million in climate financing through the Resilience and Sustainability Facility (RSF) and unlock $150 million under the Extended Credit Facility (ECF) arrangement.
Maintaining a moderately tight monetary policy will help reduce pressures in the FX market and maintain price stability.
According to the IMF, Tanzania's economy grew by 5.1% last year and is projected to grow by 5.4% in 2024, supported by improvements in the business environment and declining global commodity prices.
However, this outlook is not without risks, including regional conflicts, fluctuating commodity prices, a sudden global slowdown, ongoing issues in the foreign exchange market, and increased flooding from El Nino, which could negatively impact the economy.
This agreement was reached following discussions between an IMF team led by Charalambos Tsangarides, the IMF mission chief for Tanzania, and senior government officials, including Finance Minister Mwigulu Nchemba and BoT Governor Emmanuel Tutuba.
