[stop-imf] Ongoing pain in Tanzania; No pain at the IMF

[Robert Weissman]

Debt servicing bedevils Tanzania's development: finance minister
DAR ES SALAAM, May 30 (AFP) - Tanzania will face continued economic hardship
due to external debt servicing obligations despite recent moves by some
donors to write off a significant portion, Finance Minister Daniel Yona has
said.
In a pre-budget briefing to parliamentary committees on Monday, Yona warned
against over-expectations, in the wake of pledges made in April by the World
Bank and the International Monetary Fund (IMF) to forgive about two billion
dollars in debts.
Yona said that 27.4 percent of the government's recurrent revenue, projected
at 856.4 billion Tanzanian shillings (about 1.05 billion dollars) in the
2000/01 fiscal year, would be spent on servicing the external debt.
"Tanzania's 7.6 billion dollars is still big and its repayment is affecting
the country's development," the government-owned Daily News quoted Yona as
telling the committees.
Yona said the government was also supposed to finance the civil service
payroll and other operations, but insisted that 25 percent of the budget
would be directed to education, health and water supply, and a few priority
areas like agriculture and roads.
Yona disclosed that the total government budget was set at 1,400 billion
Tanzanian shillings (about 1.75 billion dollars), out of which 550 billion
shillings (about 650 million dollars) would be raised through external
loans, grants and aid.
The parliamentary committees for finance and economic affairs, as well as
that of social welfare, started meeting here Monday to scrutinise the budget
highlights and economic plans before the government presents them in
parliament on June 15.
Earlier, the committees were told that Tanzania's economic growth is
projected to reach 6.9 percent and inflation to be maintained below five
percent.
Planning Minister Nassoro Malocho said that, despite bad weather and poor
infrastructure, Tanzania's economy grew by five percent, while inflation was
brought down to 6.5 percent from around 30 percent in 1995.
Malocho described the trend as encouraging, but noted that more efforts were
needed to conquer poverty in the East African country, said to be one of the
world's poorest.



IMF says coffers full as repayments flow in
TOKYO, May 30 (AFP) - The International Monetary Fund's coffers are
overflowing as repayments flood in from countries it rescued in the 1990s,
IMF deputy chief Stanley Fischer said Tuesday.
"We have been repaid very, very rapidly and our liquidity situation at the
moment is the best it has been for a very long time," said the IMF's first
deputy managing director.
"Major borrowers -- Korea, Brazil, Mexico -- are all repaying fast," he told
the Foreign Correspondents Club of Japan.
"Russia has been repaying us on schedule, but pretty fast as well, and even
small countries are repaying everything."
Kazakhstan, for example, had just repaid all its debt to the IMF, partly
because soaring oil prices gave it the required funds.
The IMF's liquidity ratio fell to a dangerously low 32.2 percent in 1998
following massive bailout programs in East Asia -- for Thailand, South Korea
and Indonesia -- and then for Brazil and Russia.
But by April, the ratio had climbed to 153 percent, with 99 billion dollars
in net available funds compared to current commitments of 64 billion
dollars, said Fischer.
"We are doing well financially but it would be necessary in future crises to
make sure that private sector money does not fly out at the same time that
IMF's and other official money goes in," Fischer said.
There was room for improvement in the private sector's involvement in
tackling crises, he said.
In 1998, net available funds at the IMF fell to less than 20 billion
dollars, leading to fears of a liquidity crisis at the institution if it had
to bail out another country.
The rapid repayments from rescued countries also served as an answer to
critics of the IMF, notably in the United States, who complained about the
use of their money to reflate emerging or transition economies.
In fact, contributing to the IMF's base costs its members nothing and,
except for a few rare exceptions, the borrowers have always repaid the
multilateral body.