Minister of State, President’s Office(Labor, Economy and Investment) – Mudrik Soraga

LOCAL NEWS:

More than 2,900 out of 3,494 vetted cooperative societies have qualified for an International Monetary Fund(IMF) Sh 45 billion Covid-19 stimulus package to catalyze economic recovery from the pandemic.

Addressing the media, the Minister of state, President’s Office(Labor, Economy and Investment), Mudrik Ramadhan Soraga, pointed out that 587 societies did not qualify for the loan.

He said out of the 2,907 societies that met the lending criteria,1,474 equivalent to 50.7 percent were from Pemba and 1,433 groups or 49.3  percent were  from island of Unguja.

“First we identified, vetted the societies and picked out which qualified for the soft loans,” he explained, adding that the government had allocated sh 45 billion for the empowerment of citizens including cooperatives societies.

He said the ministry had requested sh 32 billion for the soft loans, Sh 11 billion would be channeled on the construction of fully equipped entrepreneurial centers at district levels, Sh 1.3 billion to build two honey processing plants and sh 406 million will be directed to youth battling drug abuse.

The Minister said the loan process was expected to start this week where application forms would be available at the regional offices.

“We do not want to repeat the previous mistakes as in the JK and AK loan fund in which some people misused the loans and some of them failed to repay them. Our goal is to ensure that the money is spent to improve the lives of people,” he said.

During the vetting exercise, he said they noticed that many groups were new, some had no bank statements while others had stopped operating for quite some years.

“I urged the public to observe these criteria so that the remaining 587 groups can also qualify for the loan,” he said and insisted they would only support groups which would be potential for self-sustenance.

The Minister hailed the IMF’s support for providing soft loans under the Rapid Credit Facility(RCF) and Rapid Financing Instrument(RFI) to help curb the effects of the COvid-19 pandemic.

In November last year, President Hussein Mwinyi announced a Sh 460 billion stimulus package to stir economic recovery from the Covid-19 induced recession.

He said besides the 100 milion US Dollars(over sh 230 bn) allocation that Zanzibar had received from the IMF loan to Tanzania, the government decided to take another 100 milion dollars loan bringing the total to 200 milion dollars.

The Rapid Credit Facility (RCF) provides rapid concessional financial assistance with limited conditionality to low-income countries (LICs) facing an urgent balance of payments need.

The RCF was created under the Poverty Reduction and Growth Trust (PRGT) as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis.

The RCF places emphasis on the country’s poverty reduction and growth objectives.

Financial assistance tailored to country needs

Purpose. The RCF provides low-access, rapid, and concessional financial assistance to LICs facing an urgent balance of payments need, without ex post conditionality. It can provide support in a wide variety of circumstances, including shocks, natural disasters, and emergencies resulting from fragility. The RCF also provides policy support and may help catalyze foreign aid.

Eligibility. The RCF is available to PRGT-eligible members that face an urgent balance of payments need, where a full-fledged economic program is either not necessary (for instance because of the transitory and limited nature of the shock) or not feasible (for instance because of capacity constraints or domestic fragilities).

Duration and repeated use. Financial assistance under the RCF is provided as an outright loan disbursement. While RCF financing takes the form of a one-off disbursement., there is scope for repeat use. A repeat use of the RCF is possible if the balance of payments need is caused primarily by a sudden and exogenous shock or the country has established a track record of adequate macroeconomic policies. However, no more than two disbursements may be made in any twelve-month period.

Access. Access to RCF financing is determined on a case-by-case basis, taking into account the country’s balance of payments need, the strength of its macroeconomic policies, capacity to repay the Fund, the amount of outstanding Fund credit, and the member’s record of past use of Fund credit.

In addition, RCF financing takes into account the features and magnitude of underlying shocks. Access under both the regular and exogenous shock windows are limited to 50 percent of quota per year.

The cumulative access limits are 100 percent of quota (temporarily raised to 150 percent of quota for the exogenous shock window through end-June 2023). Under the large natural disaster window, the annual access limit is 80 percent of quota and the cumulative access limit is 133.33 percent of quota (temporarily raised to 183.33 percent of quota through end-June 2023).

The Rapid Financing Instrument (RFI) provides rapid financial assistance, which is available to all member countries facing an urgent balance of payments need. The RFI was created as part of a broader reform to make the IMF’s financial support more flexible to address the diverse needs of member countries.

The RFI replaced the IMF’s previous emergency assistance policy and can be used in a wide range of circumstances.

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