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Dar es Salaam - Tanzania agreed $800m of loans from Rand Merchant Bank and China Development Bank to bolster its foreign-exchange reserves, as the country shores up a weakening currency and plugs the budget deficit.
Talks with Rand Merchant Bank to raise as much as $600m and $200m from China Development Bank are being completed, said the Bank of Tanzania’s head of economic research and policy Joseph Masawe.
RMB will raise the money through a private placement, while CBD will finance the loan from its own balance sheet, he said.
Masawe said: "We're expecting about $800m and we think before the end of this month we should be able to receive from both banks.
“We have finalised the details and we are hoping this will improve the supply of foreign currency.”
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Tanzania’s shilling weakened 21% so far this year and is Africa’s worst-performing currency, after Ghana’s cedi.
Foreign donors, including the World Bank and the UK, said last year they would withhold $558m of budget aid because of a corruption scandal in the energy industry.
The budget deficit is expected to widen to 4.2% of gross domestic product this year from 4% last year, according to Paarl, South Africa-based NKC African Economics.
The government is reducing its reliance on budget support to 3% of total revenue in the fiscal year that begins in July, from 7% in the current year, NKC said.
