Tanzania says to get IMF money

WASHINGTON (Reuters) - Tanzania will get a "good package" from the International Monetary Fund to help its export-based economy, which is reeling from the global slowdown, the nation's finance minister said on Saturday.

Finance Minister Mustafa Mkulo told a news conference that Tanzania had made proposals to the IMF and was going to get funds, which would be used to bolster the government's efforts to spur the economy.

"I am not sure I am allowed to say how much. I have to tell my president first before he hears it from Reuters. We got a very good package from the IMF," Mkulo said.

IMF Managing Director Dominique Strauss-Kahn confirmed the discussions with Tanzania, but would not say how much money would be disbursed to the east African country.

"It shows what we have said from the beginning, there is some room for fiscal stimulus everywhere. Some countries, including in Africa ... may have this kind of stimulus policy and that's the case of Tanzania," Strauss-Kahn told a news conference.

He said African countries that had practiced fiscal prudence before the crisis were in a position to increase public spending to help their economies weather the global downturn, which has hit government revenues hard.

"We have had this discussion with Tanzania, and they are not the only one in Africa showing ... some fiscal room. Unfortunately, there are also a lot of African countries ... which may be hard hit by the crisis and not having room enough for fiscal stimulus."

With traditional export markets disappearing and some mining projects being shelved, Mkulo warned that worst global economic and financial crisis in decades, triggered by the collapse of the U.S. housing market, threatened to wipe out gains achieved by his country in the last 10 years

He said growth in Tanzania's gross domestic product was forecast to slow to around 5 percent this year from a brisk 7.4 percent expansion in 2008.

The slump in the prices of major export commodities such as cotton, sisal and coffee is squeezing the country's revenue, with farmers also reluctant to sell at lower prices, Mkulo said.

Tanzania early this year suspended plans to tap international financial markets with an inaugural Eurobond issue, which would have raised about $500 million (340 million pounds) to fund infrastructure projects.

The country, whose relative macroeconomic stability has made it popular among foreign investors, also put on hold plans to seek a sovereign debt rating.

Mkulo said the suspensions were out of concern that the ratings agencies who were going to undertake the exercise were responsible for the global financial crisis. He said Tanzania was still looking into the benefits of both a Eurobond issue and credit rating before deciding on the next step.

"We felt it was not prudent to use the ratings agencies at this time. Two of our sister countries, who I won't mention, went to the market. They borrowed at about 8.5 percent and by
December the interest had risen to 17 percent," he said.

"Because we had planned to get some money from the international bond market, we have had to plan differently. We are going to get the money from different sources."

By Lucia Mutikani