June 11, 2020 / 8:35 AM / 2 months ago

UPDATE 1-Tanzania raises 2020 growth forecast to 5.5% from 4% -finance minister

(Adds background, context)

By Nuzulack Dausen

DAR ES SALAAM, June 11 (Reuters) - Tanzania now expects its economy to grow by 5.5% in 2020 compared with a previous estimate of 4%, finance minister Philip Mpango said on Thursday, after the government took steps to mitigate the economic impact of coronavirus.

Mpango said measures taken by President John Magufuli’s administration, especially its insistence that people should get back to work while taking health precautions, plus expectations about a regional and global recovery, will buoy growth.

The latest projection is more optimistic than the 4% estimate Mpango gave last month, but lower than an initial forecast of 6.9% due to the impact of the coronavirus on key sectors such as tourism.

“Real GDP growth is expected to slightly slow from the initial estimates of 6.9%, to 5.5%,” Mpango told parliament. “This is due to the impact of the COVID-19 which has spread in many countries which are our major trade partners.”

The projections are rosier than the World Bank’s, which said it expected GDP growth to drop to 2.5% in 2020 from 6.9% last year, citing the impact of the pandemic.

“International travel bans and caution against contracting the virus have severely hurt the tourism sector,” the bank said.

Tanzania has confirmed 509 coronavirus cases, with 21 deaths, and has said cases are falling substantially and it is close to defeating the virus. It has opened its international airports for commercial travel and encouraged tourists to visit.

Late on Wednesday, the International Monetary Fund approved debt relief to the country of $14.3 million over the next 4 months, and potentially up to $25.7 million over the next 23 months, it said.

“IMF debt service relief will help free up resources for public sector health needs and other emergency spending, as well as mitigate the balance of payments shock resulting from the pandemic,” it said. (Reporting by Nuzulack Dausen; Writing by Omar Mohammed; Editing by Catherine Evans)

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