IMF injects $1B to cushion Tanzania’s economy

Teetering on the ruins of the Russian-Ukraine war, the East African country of Tanzania is relieved to be getting a $1.04 billion shot in the arm from the International Monetary Fund to boost its economy as it recovers from the impact of COVID-19.

“Spillovers from the war in Ukraine are stalling the Tanzanian economy’s gradual recovery from the COVID-19 pandemic, exacerbating the country’s development and reform challenges to unleash its economic potential,” the IMF said in a statement last week.

The package, of which $151.7 million was immediately released, aims to help the country recover, fight ripple effects from Russia’s war on Ukraine, preserve macroeconomic stability and support structural reforms, the IMF said.

President Samia Suluhu Hassan, who came to power after the death of President John Magufuli, has spurred hope for introducing democratic and economic reforms, said local analysts.

“She has introduced badly needed economic and democratic reforms that have impressed the international community,” said Idrissa Wangwe, senior economist and consultant.

Like many countries, Tanzania has seen increases in the price of fuel, wheat, fertilizer and cooking oil due to rising demand as the global economy recovers from the COVID-19 pandemic as well as disruptions to commodity supply channels caused by the war in Ukraine

“I strongly believe our country is better positioned to cushion itself from European geopolitical instability by encouraging local production of wheat and other staple foods,” said Wangwe.

Climate change to blame

Observers say however that even before the war in Ukraine, the country was already struggling with rising food prices due to recurrent drought spells, which have worsened the plight of average citizens.

To curb the effects of climate change, Wangwe urged the government to promote climate-smart farming techniques, including conservation farming and growing drought-resistant crops.

Rosemary Lusomya, a tailor in --Tanzania’s port city of DAR ES SALAAM was out of work for many months due to the COVID-19 pandemic.

For almost a year Lusomya was not able to meet the growing needs of her family.

Facing mounting bills and rising food prices, she planted a vegetable garden in her backyard where she grew tomatoes, okra, carrots and peppers.

“I can’t afford to buy food in the market. The prices of almost everything have gone up within a short time,” she said.

The rising food prices have made it hard for the 46-year-old mother of six to keep up with her grocery bills.

“I went to the market yesterday only to find that the prices of maize flour, cooking oil and meat have all gone up,” she told Anadolu Agency.

Spiraling cost of living

According to Lusomya, a liter of cooking oil now sells for 12,000 Tanzanian shillings ($5.15) compared with 8,000 shillings ($3.43) previously. The price of rice has also risen from

2,000 shillings ($0.86) per kilo to 2,500 shillings ($1.07).

Lusomya is among many average citizens who have been pushed to the edge of survival by the rising inflation.

The rising prices of fuel have pushed the prices of cereals and other staple foods to record-high levels, posing a heavy burden to households, including Lusomya’s family.

According to local analysts, prices of essential foods are not likely to fall anytime soon due to the volatility of the global market.

Danstan Someko, a security guard in Dar es Salaam, makes 400,000 shillings ($171) per month. But due to the rising prices, he has been forced to spend nearly 80% of his salary to purchase food.

“Two weeks ago, I was buying a kilo of maize flour for 1,000 Tanzanian shillings ($0.43). It has since risen to 1,500 ($0.64). When I asked traders why has it gone up, they say it was because of transportation costs,” said Someko, who has four children and struggles to make ends meet.

“My family has totally forgotten about bread. We can’t afford it. We instead grow cassava and eat it for breakfast,” he said.

“We don’t buy vegetables or meat in the market. For now, that is a rare luxury.”

Source: Anadolu Agency